Primeline given Lishui contract extension

CNOOC has agreed that Primeline Energy Holdings can vary the terms of a Petroleum Contract (PC) for block 25/34 in the East China Sea offshore Wenzhou.

Offshore staff

LONDON, UK --CNOOC has agreed that Primeline Energy Holdings can vary the terms of a Petroleum Contract (PC) for block 25/34 in the East China Sea offshore Wenzhou. This will allow Primeline to carry forward its obligation for an exploratory well into the contract's second exploration phase.

To date Primeline, as a contractor in the PC, has acquired 550 sq km (212 sq m) of 3D seismic and has spent over $20 million, but due to a scarcity of rigs has so far been unable to drill the required well. However, it has completed a site survey for two proposed exploratory wells in the Lishui gas play.

In 2007, the company and CNOOC agreed on a rolling development strategy for the Lishui 36-1 gas field, which was discovered within the PC area in 1997. Since October last year, when Primeline signed an Agreement in Principle for Gas Sale with Zhejiang Natural Gas Development Co, it has been working on an overall development plan for Lishui, discovered in 1997. This includes land acquisition for an onshore gas reception terminal from Wenzhou Government.

Under the revised terms of the PC agreement, Primeline can now delay its decision to enter a second exploration phase until end-October, giving it more time to focus on development planning. When it has reached a development decision, the agreed development area will be carved out of the exploration area and will be the subject of a supplemental accord with CNOOC.

04/09/2009

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