CNPC tie-up with Statoil may push offshore operations

PUBLISHED : Friday, 02 March, 2007, 12:00am
UPDATED : Friday, 02 March, 2007, 12:00am

China National Petroleum Corp, parent of listed PetroChina, has signed a strategic co-operation memorandum of understanding with Norway's state-backed oil producer Statoil, in a move that may facilitate its expansion on offshore drilling.

CNPC, the nation's largest oil and gas producer, disclosed the signing of the pact on its website without giving details. A company spokesman said he was not familiar with the details.

CNPC produces oil and gas primarily from onshore fields. Its offshore operation is limited to fields less than five metres deep, but is expected to start drilling its first deep-sea well in the South China Sea by May.

Although the company can conduct drilling in deeper water depths, China National Offshore Oil holds exclusive rights to form joint ventures with foreign companies.

Foreign firms are eager to co-operate to tap the largely unexplored resources in China's deep sea, while mainland firms could take advantage of special technologies owned by foreign players.

A Statoil spokesman said the two companies could complement each other's strengths and potential co-operation with CNPC could be either in or out of China.

He noted that China's fast-growing gas consumption and rising imports of liquefied natural gas would provide opportunities for co-operation.

The vast majority of Statoil's oil and gas output is from the North Sea. It has minor onshore operations overseas.

Statoil and Norwegian rival Norsk Hydro are in the process of merging their oil and gas assets, which will create the world's largest offshore oil producer.

A Shanghai Securities News report quoted an unnamed source as saying CNPC may join hands with Statoil to invest US$1.8 billion to develop block 14 of Iran's South Pars offshore gas field. Both firms declined to comment.

In December PetroChina signed a preliminary deal to buy three million tonnes of LNG a year for 25 years from the field, starting 2011.