China approves Zhao Dong block expansion

Offshore staff

SYDNEY, Australia -- Roc Oil (Bohai) Co.’s petroleum contract for the Zhao Dong block in Bohai Bay offshore China has been modified. The aim is to help commercialize near-field discoveries in the area and to spur further exploration.

Under the changes, the existing contract will include two additional blocks. Also, the term of the Zhao Dong Contract and Production Period will be extended when necessary to accommodate any new production from these additional blocks.

The existing 28-sq km (10.8-sq mi) contract area will be expanded to take in the adjoining 16-sq km (6.2-sq mi) Zhanghai and 26-sq km (10-sq mi) Chenghai blocks.

Participating interests in the new blocks are separate from the existing block - ROC 80% and New XCL (Sinochem) 20% - with PetroChina having a 51% back-in option on future commercial development.

ROC will retain operatorship of the expanded block. Any development will likely make use of the existing Zhao Dong facilities and replicate the cost sharing and tariff arrangements implemented for the C4 unitized field (ROC: 11.575%).

The initial work in for the additional areas will include drilling of two appraisal wells from one of the Zhao Dong platforms over the next two years, the first of these probably this summer.

The newly drilled reserves will likely be brought into production immediately following the completion of the well.

ROC CEO Alan Linn said: "Extension of the Zhao Dong block provides the potential to commercialise and incrementally develop a number of small discoveries through Zhao Dong facilities in parallel with ongoing activities. Exploration opportunities within this acreage could also impact the future profitability and recovery life of the existing assets.”

03/25/2011



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