China National Offshore Oil Corporation (CNOOC) has signed strategic cooperation agreements with nine international firms for two offshore areas in the Pearl River Mouth Basin off China.
State-owned CNOOC said the agreements—which include Chevron, ConocoPhillips, Equinor, Husky, KUFPEC, Roc Oil, Shell, SK Innovation, and Total—are a first step in establishing what could be long-term cooperation on exploration and development of offshore Areas A and B. Each international firm has existing upstream operations in China.
The 15,300-sq-km Area A lies in 80–120 m of water. Firms are open to explore its deep layers below the Paleogene Enping formation. The 48,700-sq-km Area B lies in 500–3,000 m of water. Firms can explore each layer beneath the surface of that area.
The areas “are understood to be prospective for ultradeepwater, high pressure/high temperature, or low porosity/low permeability reservoirs,” said Andrew Harwood, research director at consultancy Wood Mackenzie.
The agreements are part of CNOOC’s drive to boost domestic exploration, increase gas reserves 50% by 2025, and develop deepwater expertise. Wood Mackenzie expects the firm to increase its exploration spending and activity in China during 2019. CNOOC will retain operatorship if the agreements evolve into exploration contracts.
“The Pearl River Mouth Basin is believed to hold significant deepwater gas and shallow-water oil potential, and Wood Mackenzie expects the majority of future exploration investment to target this area,” Harwood said.