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CNOOC buys into South China Sea blocks with SK Innovation deal

10th February 2015

China National Offshore Oil Corporation (CNOOC) has signed two production sharing contracts (PSCs) with South Korea’s SK Innovation Co., Ltd. (SK) for Blocks 04/20 and 17/03 in the South China Sea

China National Offshore Oil Corporation (CNOOC) has signed two production sharing contracts (PSCs) with South Korea’s SK Innovation Co., Ltd. (SK) for Blocks 04/20 and 17/03 in the South China Sea
Once entering the development phase, CNOOC has the right to participate in up to 60 per cent of the working interest in any commercial discoveries in the blocks

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

The exploration costs required for the exploration operations will be borne by CNOOC and SK in a proportion of 20 per cent and 80 per cent 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 per cent of the working interest in any commercial discoveries in the blocks.

After signing the above-mentioned PSCs, CNOOC will assign all of its rights and obligations under such contracts, except for those relating to CNOOC’s administrative functions to CNOOC China Limited, a subsidiary of CNOOC Limited.

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