CNOOC Finds Large Offshore Gas Fields near Macao

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Last updated at: (Beijing Time) Tuesday, July 29, 2003

CNOOC Finds Large Offshore Gas Fields near Macao

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CNOOC Ltd, the nation's largest offshore oil producer, has discovered significant natural gas reserves in the South China Sea, claimed to be the largest offshore findings of the past three years in China.

The two gas fields, around 200 kilometres offshore from Zhuhai and Macao in southern China, hold combined reserves of about 42.48 billion cubic metres. The reserves should make up about 10 per cent of CNOOC's existing oil and gas reserves.

The fields, named Panyu 30-1 and Panyu 34-1, will strengthen the company's dominance in Chinese waters, and help it cash in on the rapid gas demand in the Zhuhai-Macao area.

With the discoveries, CNOOC expects its gas supplies to triple to 18-22 billion cubic metres a year by 2010, the firm's Chief Financial Officer Mark Qiu told reporters during a conference call yesterday.

"The discoveries are very significant," said Qiu.

CNOOC plans to develop the fields together with smaller offshore reserves nearby to improve economic efficiency.

Qiu said they plan to set aside US$500 million-US$700 million for the initial development of the fields.

The gas will be delivered to Zhuhai area and Macao via submerged pipelines, starting in 2006 or 2007.

The discovery is the first major natural gas find off the Pearl River Mouth. It was an unexpected discovery, as CNOOC had mainly conducted oil explorations in the area before.

"The discoveries open new exploration prospects in the area," Zhou Shouwei, president of the company, said in a statement.

Gordon Kwan, an energy analyst with the Hong Kong Shanghai Banking Corporation, said the discoveries are expected to attract foreign investors to explore oil and gas in the area.

"Gas is always associated with oil," said Kwan. "The new discoveries indicate the potential of rich oil and gas reserves in the Pearl River Mouth area."

Qiu expects 70 per cent of the gas will be consumed by power plants and the rest by residential users in Zhuhai and Macao.

CNOOC is eyeing its embryonic natural gas industry as the new cash cow to fuel its growth.

"The natural gas business is a new and increasingly visible growth engine for cash flow and earnings for the company," said Zhou.

Qiu said the new finding is set to help the company build an extensive gas supply network in South China to meet the increasing demand for clean energy in this most prosperous area in China.

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