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CNOOC, Husky to explore deep water oil
(AP)
Updated: 2005-12-07 19:18

China's largest offshore oil producer, CNOOC Ltd., said its unlisted parent company plans to start deep water oil and gas exploration in the South China Sea with Canada's Husky Energy Inc. next year.


File photo of a CNOOC oil rig in China's Bohai Sea. [newsphoto]

If the scheduled exploration finds sizable reserves in a bloc in the South China Sea about 300 kilometers, or 185 miles, south of Hong Kong, it will be China's first deep water oil and gas field.

CNOOC's parent company, China National Offshore Oil Corp., is currently restricted to pumping oil and gas offshore at no deeper than 350 meters, or 1,155 feet, because of the technology currently available to it.

CNOOC previously signed a production sharing contract with Husky, an integrated oil and gas producer, to jointly explore and develop two deep water blocs in the South China Sea.

The two companies explored the other bloc in the western part of the South China Sea in 2004, but the reserves discovered were too small to justify commercial drilling.

"Deep water exploration will be one of the major growth areas for CNOOC. A new exploration peak in the South China Sea is coming," Shi He Sheng, the chief geologist at CNOOC Ltd., told reporters Tuesday at a presentation on the company's plans in Shenzhen.

CNOOC jointly owns two other deep water blocs in the South China Sea with U.S.-based Kerr-McGee Corp. and Devon Energy Corp. but exploration hasn't started yet.

Under the terms of the production sharing contract, Husky, Kerr-McGee and Devon Energy will bear all the costs during the exploration period. CNOOC has the rights to a 51 percent stake if the bloc is commercially viable.
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