CNOOC Contract for China Sea - Analyst Blog
China’s largest offshore oil explorer CNOOC Ltd. (CEO) has signed a production sharing contract (PSC) with BG International Limited (BG Group) for Block 63/16, located in the Qiong Dong Nan basin in Western South China Sea.
This PSC with BG Group is not a one-off event as two PSCs for blocks 64/11 and 53/16 have already been signed in 2006 between the two parties.
As per the agreement, BG Group will conduct 3D seismic survey and exploration drilling in Block 63/16 and bear all exploration expenditures. CNOOC holds the right to participate in up to 51% working interest in any commercial discoveries in the block.
CNOOC’s ability to enter into PSCs allows it to acquire, at no cost, a participating interest of up to 51% in any offshore China discovery by a foreign company.
As international oil companies expand their operations across the globe to increase production, they will want to develop the rich offshore Chinese oilfields, and CNOOC will be able to reap the benefits.
This arrangement has not only helped the company to strengthen its resource base, but has also enabled it over the years to develop the technical and management expertise to independently conduct operations on other projects.
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