China National Offshore Oil Corporation is ramping up its operations in the South China Sea, unveiling a new production sharing contract with Australia’s Roc Oil and Hong Kong-based Smart Oil Investment.
The PSC covers part of CNOOC’s Weizhou oilfield, a staged development which has seven oil wells currently in production located in the Beibu Gulf Basin of the South China Sea.
CNOOC said the new PSC, which follows a similar arrangement with Canada’s Husky Energy unveiled in May, covered the Weizhou 10-3 oilfield and the prospective Block 22/04 contract area.
Under the arrangement, Roc Oil and Smart Oil will conduct the development of the Weizhou 10-3 oilfield in proportion to their participating interests, of 35 per cent and 25 per cent respectively.
CNOOC holds the remaining 40 per cent interest in the project.
Smart Oil and Roc Oil will also be responsible for the exploration phase of Block 22/04, with Smart Oil holding a 65 per cent participating interest and Roc Oil 35 per cent.
CNOOC said it held the rights to a participating interest of up to 51 per cent in any commercial discoveries in Block 22/04.
Minimum works for the first phase of exploration includes the drilling of one exploration well.
Roc Oil chief executive Yuanling Juang said the PSC was a positive step in delivering the company’s strategy of a larger presence in China.
“The award of operator represents a vote of confidence in the company’s long-term plans and proven abilities in China as an offshore operator, and also continues to build upon our established and strong relationship with CNOOC,” Dr Jiang said.
“Exploration remains an important component within Roc’s growth plans and we continue working to secure exploration acreage in commercially-proven oil basins with access to existing infrastructure.
“The exploration Block 22/04 satisfies these criteria.”
CNOOC’s Weizhou oilfield is expected to reach peak production of around 9,400 barrels of crude oil per day in 2018.
The project is one of five new developments expected to come on stream for CNOOC in 2018, comprising Weizhou, the Stampede oil field in the United States, as well as the Penglai oilfield and Dongfang and Wenchang gas fields in offshore China.
CNOOC’s total expenditure in 2018 in budgeted at between ¥70 billion ($14.26 billion) and ¥80 billion $16.3 billion).
In February, while announcing CNOOC’s 2018 business strategy, chief executive Yuan Guangyu said the company would continue to pursue a sustainable and environmentally-friendly development model while increasing oil and gas production and reserves, to deliver improved shareholder returns.