Cnooc Signs Agreements With Nine Companies
Chinese state-owned Cnooc December 18 said it has signed strategic cooperation agreements with nine international companies for exploration in the Pearl River Mouth Basin, which is part of South China Sea.
The nine companies are Chevron, ConocoPhillips, Norway's Equinor, Canada's Husky, Kuwait's Kufpec, Australian independent Roc Oil, Shell, South Korea's SK Innovation, and Total.
According to the agreements, the strategic cooperation areas are Area A and Area B in the Pearl River mouth basin, Cnooc said. Area A covers 15,300 km2 and Area B approximately 48,700 km2.
“The agreements will facilitate the establishment of a long term and stable cooperation and share the development opportunities to a certain extent in the strategic cooperation areas, creating conditions for the final signing of contracts,” Cnooc said.
Wood Mackenzie's research director Andrew Harwood said: "The agreements were announced on the 40th anniversary of [Chinese leader from 1978 until 1989] Deng Xiaoping's unveiling of China's historic Reform and Open Up policy, and can therefore be viewed as reaffirming China's desire to attract international investment into its upstream sector.
"The two strategic cooperation areas are understood to be prospective for ultra-deepwater, high pressure/high temperature, or low porosity/low permeability reservoirs," he said, noting that all nine selected companies have existing E&P operations in China, and that if the agreements are progressed to full exploration contracts, Cnooc would retain operatorship.
"We expect the company to raise its domestic exploration spend and become more active in terms of exploration in 2019. The Pearl River Mouth Basin is believed to hold significant deepwater gas and shallow water oil potential, and Wood Mackenzie expects the majority of future exploration investment to target this area. Cnooc has set its sights on raising gas reserves by 50% by 2025 and developing further its deepwater expertise. These agreements will help the company achieve its targets and hone its technical skill-set," said Harwood.