LONDON -- Primeline Energy Holdings Inc. has agreed to extend the first exploration phase under the petroleum contract for block 25/34 in the East China Sea.
Primeline owns 75% of the foreign contractor's interest in the area with China National Offshore Oil Corp. (CNOOC), the Chinese state oil company.
The contract provides for an exploration period of seven years from the date of commencement, divided into three separate phases of three, two, and two years.
During exploration, the contractors were required to acquire 200 sq km (77 sq mi) of 3D seismic and to drill one well to 2,500 m (8,202 ft) with a minimum exploration expenditure of $6 million. So far during the first phase, Primeline has acquired 550 sq km (212 sq mi) of 3D seismic and has spent in excess of $10 million, but due to the lack of availability of drilling rigs, has been unable to drill the required well. In view of current rig market conditions, CNOOC has agreed to extend the first phase of the exploration period by an additional 12 months.
The amended agreement between CNOOC, Primeline, and Primeline Petroleum Corp. states the parties have agreed that the petroleum contract be amended to provide that the first exploration period shall be for a period of four years from the date of commencement on May 1, 2005, provided that one of the two subsequent two-year exploration periods will be reduced by a corresponding period of one year unless it is agreed that subsequent events justify continued exploration of the block.
The minimum exploration requirement for each of phases two and three is the drilling of one well to 2,500 m (8,202 ft) and an expenditure of $5 million.