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South China Sea gas find to fuel CNOOC dreams

By Xiao Wan (China Daily)
Updated: 2009-12-10 08:03

China's biggest offshore oil company CNOOC Ltd said yesterday its Canada-based partner Husky Energy had made a second significant deepwater gas discovery in the South China Sea, showing high potential in energy resources in the region.

The newly discovered Liuhua 34-2 field, located in the Pearl River Mouth Basin in the eastern South China Sea, is capable of producing 55 million cubic feet of natural gas per day during test drilling, CNOOC said in a statement yesterday.

In order to determine the full potential of the field, an appraisal well would be drilled in early 2010 by Husky, said the statement.

CNOOC is entitled to hold a 51 percent stake in the production-sharing contract for the discovery, it said.

The discovery of Liuhua 34-2 follows the finding of Liwan 3-1 field in 2006 in the same region. "We are excited about the new deepwater discovery, which further demonstrates the huge potential in the deepwater area in South China Sea. We expect the two adjacent discoveries to be developed in a more efficient way by sharing development facilities," said Zhu Weilin, executive vice-president of the company and general manager of exploration department.

"This exciting exploration discovery, combined with the development of the Liwan 3-1 field, is a significant milestone towards our goal of strategic commercial development and production from this promising area," said John Lau, president & CEO of Husky Energy Inc.

Husky, controlled by Hong Kong billionaire Li Ka-shing, started exploring in offshore China in 2002. The company is now one of Canada's largest energy and energy-related companies.

Cooperation with overseas companies can help CNOOC Ltd better develop the rich deepwater energy resources off China's coast, as at present domestic companies still lag behind in technology, said analysts.

"We need advanced technology," said Qiu Xiaofeng, an analyst with China Merchants Securities. "These kinds of cooperation can reduce risks in project development."

CNOOC is also planning to double its crude oil and natural gas production in the western part of the South China Sea.