Chevron to Start Drilling off South China Coast by Year-End
Chevron plans to start drilling its first gas exploration well off the southern coast of China before the end of the year, a senior regional company executive said.
The well site, in Block 42/05, is about 300 kms south of Hong Kong, an area where large gas reserves have been found. The company is to drill wells in two other blocks further west, 64-18 and 53-30, around 125 kms south of China's Hainan island, Dow Jones quoted Chevron Asia South Managing Director Joseph Geagea as saying.
Investment decisions for the three blocks, acquired from Devon Energy Corp last year, depend on the results of the drilling, he said, without providing a timeframe.
Chevron has a 59.18% stake in Block 42/05, which covers 6,939 sq kms, and BP has the remainder. It has 100% of the other two blocks, which cover around 14,000 sq kms.
Water depth at the Chevron blocks ranges from 500 meters to 2,600 meters. The blocks are far from the Spratly Islands and other areas of the South China Sea where countries including Vietnam and the Philippines are disputing China's claims of sovereignty.
Chevron is required to have production-sharing contracts with state-owned China National Offshore Oil Corp, which will give CNOOC the right to take a stake of up to 51% subject to a find that gets development approval.
It has already concluded a 30-year onshore production-sharing contract with China National Petroleum Corp. for the development of the nearly 2,000 sq kms of natural gas area in Chuandongbei in central China.
Chevron, Geagea said, is awaiting a production permit from the Cambodian government before starting development of a 4,709-sq-km block in the Gulf of Thailand, where it successfully drilled three wells in 2010.
It also hopes to make an investment decision by the end of 2011 on a big Vietnam gas project, estimated to cost around $7 billion.
'We still have quite a bit of work with PetroVietnam to make sure all commercial agreements, all regulatories and necessary contracts are in place before we reach a final investment decision,' he said.
Chevron has a pact with state-run PetroVietnam to produce gas from Vietnam's Block B, from which a $ 5billion 400-km gas pipeline will extend to the coast.