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CNOOC, Husky start offshore oil project in South China Sea
( 2002-07-12 09:59 ) (1 )

China National Offshore Oil Company Ltd (CNOOC), the nation's No 3 oil producer, has started commercial production from its Wenchang offshore project with Canadian Husky Energy in the South China Sea.

The project, consisting of two oil fields, is located in the western Pearl River Mouth Basin, about 400 kilometres southwest of Hong Kong and 140 kilometres east of Hainan island. CNOOC discovered the two oil fields independently. The fields have booked net oil reserves of 55.36 million barrels.

CNOOC, operator of both fields, holds a 60 per cent working interest in the project, while Husky has the remaining 40 per cent.

"The Wenchang project progressed on schedule and on budget," said Zhou Shouwei, executive vice-president of the company, in a statement. "The expected production will contribute to material production increases for offshore China in the second half of the year."

The peak daily production of the two fields, named Wenchang 13-1 and 13-2 fields, averages 50,000 barrels.

In a separate statement, Husky's President John C.S. Lau said cash flow from the project will support exploration activities for block 39-05, which is adjacent to the Wenchang project.

Husky estimates the total development cost to be US$327 million, and estimates operating costs during peak production to be approximately US$2 per barrel.