Shell, CNOOC Clinch PSC on Bohai 11/26

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Last updated at: (Beijing Time) Thursday, January 17, 2002

Shell, CNOOC Clinch PSC on Bohai 11/26

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World's leading oil company Shell and China's leading oil company CNOOC signed on January 14 a product share contract (PSC) on the development of a 3,190 km-oil- block, Bohai 11/26, in the south Bohai Bay.

According to the contract, Shell will be the operator of the block. It enjoys the right of drill at least two wildcats in the area in the first two years after the signing of the contract. It also has the option to drill another two wells in the four years that ensue.

As the contract stipulates, if commercial oil/gas is discovered, Shell has the right to participate in developing the block in partnership with CNOOC.

Some 25 meter beneath the water and around 30 km northwest to Shandong province's Longkou city, the block is one of the four blocks CNOOC promised to jointly develop with Shell when the two companies signed a strategic-partnership contract on November 31, 2000.

In fact, the two companies have formed an alliance in tapping China's natural gas market in the coastal areas like Shandong, where CNOOC has secured a 400mcm/year gas supply contract with the provincial government amid fierce competition from CNOOC's domestic rivals, PetroChina and Sinopec.

The contract also means much for Shell. It's setting foot on the potentially gas-rich Bohai Bay, together with the west-east gas pipeline allegedly to be pocketed by Shell, adds to the company's edge in China's natural gas market.

Shell plans to carry out a 3-demension seismic valuation to the 11/26 block in 2002 and dig two wildcats in 2003.

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