Chevron, BP snag interest in deepwater South China Sea blocks

Sources: CNNOC, Chevron

CNOOC Limited (NYSE: CEO) announced that its parent company, China National Offshore Oil Corporation (CNOOC) has signed amendment agreements to the Production Sharing Contracts (PSCs) with Chevron (NYSE:CVX), BP (NYSE:BP) and Devon Energy Corporation (NYSE:DVN) for deepwater blocks 42/05, 64/18 and 53/30 in South China Sea. These agreements have been approved by the Chinese government. 

Prior to this, Chevron and BP signed Sale and Purchase Agreements with Devon for the blocks. Chevron acquired a 59.18% interest in block 42/05 and a 100% interest in blocks 64/18 and 53/30 from Devon in the exploration phase; BP acquired the remaining interest of Devon in block 42/05. 

Block 42/05, located in Baiyun Sag of Pearl River Mouth Basin in the Eastern South China Sea, covers a total area of 6,939 square kilometers. Blocks 64/18 and 53/30 are located in Qiong Dong Nan Basin in the Western South China Sea with acreage of 7,712 and 6,313 square kilometers, respectively. Water depths of the three blocks range from 300 to 2,000 meters. 

During the exploration period, Chevron will act as the Operator in the three blocks. CNOOC Limited has the right to participate in up to a 51% interest in the event of any commercial discovery in the blocks. 

Mr. Zhu Weilin, Executive Vice President of the Company and General Manager of the Exploration Department commented, “We welcome Chevron and BP to become our new partners in these blocks and look forward to the joint exploration of the great deepwater potential in the South China Sea.” 

"Participating in the exploration of this prospective deepwater basin furthers our strategy to grow our business in China and the Asia Pacific region," said Chevron Vice Chairman George Kirkland.

Jim Blackwell, president, Chevron Asia Pacific Exploration and Production, said, "We welcome the opportunity to partner with CNOOC and apply our industry-leading drilling technology, expertise, and safety practices to explore the South China Sea's deepwater areas."

In 2005 and 2006, CNOOC signed three PSCs with Devon for blocks 42/05, 64/18 and 53/30.

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