CNOOC, SK Innovation Sign PSCs for Two South China Sea Blocks

CNOOC Limited on Tuesday announced that its parent company, China National Offshore Oil Corporation (CNOOC), has signed two production sharing contracts (PSCs) with SK Innovation for Blocks 04/20 and 17/03 in the South China Sea.

The two blocks are located in the Pearl River Mouth Basin. Block 04/20 covers a total area of 5,138 sq kms and has a water depth of 50-100 meters. Block 17/03 covers a total area of 7,686 sq kms and has a water depth of 50-100 meters.

Both blocks are included in CNOOC’s Open Blocks in Offshore China for the year 2012.

According to the terms of the PSCs, SK shall act as the operator of the two blocks. The exploration costs required for the exploration operations will be borne by CNOOC and SK in a proportion of 20 percent and 80 percent of participating interest, respectively.

Both parties will conduct 2D seismic data surveys and will drill exploration wells. Once entering the development phase, CNOOC has the right to participate in up to 60 percent of the working interest in any commercial discoveries in the blocks. 

Last week CNNOC announced that China's first deepwater gas field in the South China Sea has proven reserves of more than 100 billion cubic meters. 

In September last year, CNOOC’s first deepwater rig, CNOOC 981, made its first deepwater gas field discovery, called the Lingshui 17-2 gas field, some 150 kilometers south of Hainan Island, is in the east Lingshui Sag of the Qiongdongnan Basin.