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CNOOC (CEO) Inks Production Sharing Contract With Empyrean

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The parent organization of CNOOC Limited (CEO - Free Report) , China National Offshore Oil Corporation, recently signed a production sharing contract (PSC) for Block 29/11 with Empyrean Energy PLC. The block is part of the prolific extensional sedimentary Pearl River Mouth basin, located in South China Sea. The PSC will start from Dec 13, 2018.

The total area of the Block 29/11 is 1,808 square kilometers and its water depth lies in the range of 300-600 meters. Per the deal, Empyrean will be the operator in the block and carry out the exploration works. The cost of exploration will be assumed by the Perth, Australia-based upstream company. In case of a commercial discovery at the site, CNOOC can engage in operations while assuming a maximum 51% participating stake, once the block enters the development phase.

During the first phase of the contract, — which will last for two and a half years — one exploration well of 2500 meters will be drilled, with the help of the data gathered through 3D seismic surveys. The tests carried out so far have revealed hydrocarbon resources of 774 million barrels from three prospects, namely Jade, Topaz and Pearl. In the second phase, an additional well will be drilled at 2500 meters depth.

CNOOC’s presence in the South China Sea, including the Block 29/11, is immense. During the first quarter, the company came up with new discoveries of Enping 10-2 and Enping 15-2 herein. The state-run energy company’s activities in the region over the past few quarters are on the rise. Notably, CNOOC has finalized an internal restructuring, after which it has decided to divest some of its properties in the United States along the Gulf of Mexico, per Reuters. The decision came after a few months from its huge Stabroek block oil discovery offshore Guyana. CNOOC’s unit, CNOOC Nexen Petroleum Guyana Limited, is partnering with Exxon Mobil Corporation (XOM - Free Report) in the project.

Selling stakes from the producing oil assets in the Gulf of Mexico is still not in the divestment plan. Notably, CNOOC owns 25% stake in the Stampede project of Hess Corporation (HES - Free Report) and 21% interest in the Appomattox development of Royal Dutch Shell plc (RDS.A - Free Report) , both located in the Gulf of Mexico.

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