CNOOC wins Australian permit

PUBLISHED : Thursday, 02 August, 2007, 12:00am
UPDATED : Thursday, 02 August, 2007, 12:00am

CNOOC, the mainland's dominant offshore oil producer, has won a permit to explore for oil and gas in an area offshore of Western Australia that may cost A$162.1 million (HK$1.08 billion) over six years.

The company was one of nine firms that won new exploration permits in 11 offshore areas, Australia's Minister for Industry, Tourism and Resources said in a statement.

The permits require a total investment of A$800 million over the next six years, and were awarded from 21 bids submitted before the May 21 deadline.

CNOOC won the exploration right for the W06-1 block of the Bonaparte Basin, an area 350km to 550km west of Darwin off the northwestern coast of Western Australia.

CNOOC and parent China National Offshore Oil Corp's spokesman declined to comment before any contract is signed.

W06-1 is adjacent to the Bayu/Undan gas field operated and majority-owned by United States-based ConocoPhillips.

The field, at 80 metres underwater, has geological gas reserves of 3.4 trillion cubic feet, and has been in production since 2004, according to ConocoPhillips.

Its development cost has amounted to US$3.3 billion and it has an estimated production life of 25 years.

W06-1, covering an area of 4,220 square km, is one of five blocks in the Bonaparte Basin that were awarded on Tuesday.

CNOOC has committed to invest in 400 square km of three-dimensional seismic surveys, geological studies and the drilling of five exploration wells at a total estimated cost of A$81.3 million.

The company also proposed to spend an additional A$80.8 million in drilling five more wells and surveying an additional 400 square km.

W06-1 and the adjacent W06-2, which was won by French oil giant Total, are closest to the operating Bayu/Undan field. They were the most sought after sites, with each attracting three bidders.

While W06-2 has never been drilled, nine exploration wells have already been drilled in W06-1, of which two have shown oil and gas accumulations.

Total, which won the nearby W06-3 block, plans to invest a total of A$224.2 million in the two areas.

India's Reliance Industries, another winner, plans to invest A$29.76 million while Australia's Goldsborough Energy aims to spend A$18.35 million on two other neighbouring areas.

CNOOC has an exploration permit over 21,000 square km of an area in the Outer Browse block off Western Australia, which will expire in January.

It also has a 5.3 per cent stake in the North West Shelf gas project off Western Australia that is supplying the Guangdong liquefied natural gas import terminal.

Its other exploration rights are located in Nigeria, Indonesia, Myanmar, Kenya and Equatorial Guinea. Around one-sixth of its total proved oil and gas reserves were in overseas fields at the end of last year.