Recoverable reserves in the natural gas field discovered by
Husky Energy in the South China Sea last week need further
evaluation before being confirmed, sources with China National
Offshore Oil Company Limited (CNOOC Ltd) said yesterday.
Xiao Zongwei, spokesman for CNOOC Ltd, told Xinhua News
Agency that it was still too early for them to announce the
discovery of an enormous natural gas field.
Canada-listed Husky Energy Inc announced last Wednesday that the
Liwan 3-1-1 field identified on block 29/26, a production sharing
contract (PSC) block with the CNOOC Ltd in the Pearl River Mouth
Basin, was estimated to contain a potential recoverable reserve of
4 to 6 trillion cubic feet of natural gas.
Husky announced on its website that the discovery was one of the
largest natural gas discoveries in offshore China.
Husky found natural gas in its first well drilled in the block.
The recoverable reserve of the possible field can be confirmed only
after more wells are drilled and further evaluation studies made,
Xiao said.
Under the PSC between Husky and CNOOC Ltd signed in 2004, CNOOC
Ltd has a stake of up to 51 percent in the development of any
discovery.
After Husky announced the discovery, CNOOC Ltd witnessed a 12
percent rise in its share price on the Hong Kong Exchanges and
Clearing Limited (HKEx) over two days last week.
Husky still has a 100 percent interest in the block and CNOOC
Ltd is still a long way from making a decision on whether or how
much interest it would take in the development, Xiao said.
Further exploration and evaluation, a development plan, and
agreement from both sides and the Chinese government on the
development plan are still required.
Government permission is essential for commercial development,
he added.
A circular released by CNOOC Ltd on the HKEx on Monday said that
hydrocarbon reserves of the discovery needed further evaluation and
CNOOC Ltd's decision on whether to exert its investment interests
depended on the assessment yet to be made.
If confirmed, the discovery, drilled at a depth of 1,500 meters,
could be the first significant deep-water gas discovery in offshore
China, indicating a possible huge increase in China's oil and gas
reserves, according to experts.
Incorporated in Hong Kong in August 1999, CNOOC Ltd is a 70.64
percent held subsidiary of China National Offshore Oil Corporation,
China's largest offshore oil and gas producer.
(Xinhua News Agency June 21, 2006)