Australia and East Timor came to terms in late December on an agreement that will allow Phillips Petroleum Property Ltd. to pipe gas from the Bayu-Undan gas field to Australia.

Pipeline moves oil from Timor Sea

Australia and East Timor came to terms in late December on an agreement that will allow Phillips Petroleum Property Ltd. to pipe gas from the Bayu-Undan gas field to Australia. Phillips had tabled plans for the pipeline five months prior because of financial issues between Australia and East Timor.

The new tax and fiscal package allows East Timor to receive more than $3.6 billion in royalties over 20 years from the Timor Sea oil and gas fields. The project will also provide employment opportunities for the East Timorese.

Phillips and co-venturers will lay a 500-km pipeline that will link Darwin, Australia, with the field. The latest agreement will help to pave the way for other investment opportunities in the Timor Sea, where squabbling over assets has held up production.

Santos awarded permits in Arafura Sea

Santos Ltd. secured a petroleum exploration permit from Australia's federal government and the Northern Territory in the Money Shoal Basin in the Arafura Sea in late November. The permit borders the Evans Shoal gas field, where Santos has a 40% interest. The newly awarded permit area, NT/P61, covers 5,000 sq km. It is 350 km from Darwin, which could be significant when the proposed pipeline from Bayu-Undan field, operated by Phillips Petroleum Co., is built.

Oil find offshore Western Australia

Roc Oil Company Ltd.'s oil find offshore Western Australia belies the region's reputation as one that contains only gas. Roc's Cliff Head-1 well found oil in WA-286-P in relatively shallow water at the end of December, confirming the field as a promising oil prospect. The field could contain more than 70 million BOE. More appraisal drilling is planned for the second half of this year.

Shell ups Pohokura investment

Shell Todd Oil Services announced plans for the Pohokura gas field that could cost up to $378 million. At a minimum, field development will include three unmanned platforms, more than 20 production wells, an onshore production plant, and a 70,000 cubic-meter liquefied petroleum gas (LPG) facility.

The Pohokura Field is New Zealand's largest development prospect at 964 bcf of gas and 53 million BOE and is the likely successor to the aging Maui Field as a source of hydrocarbons. The field is located just off the coast of Taranaki, New Zealand's major oil and gas province. Royal Dutch Shell owns 52% of the field, with partners Preussag (33%), and Todd Corp. (15%). Appraisal drilling is scheduled for the first half of 2002, with a two-year construction phase expected to begin this year. Initial offshore production drilling is scheduled for 2004, with first gas delivery in early 2005.

New Zealand opens bidding

Six near-shore blocks will be on offer in New Zealand's 2002 Onshore and Near-shore Taranaki Exploration Permit Bidding Round, for which applications will be accepted through April 30. Many of the blocks on offer are located adjacent to existing infrastructure, producing fields, and recent discoveries. In the interest of attracting new investors, the New Zealand government has put in place an internationally competitive fiscal regime and an open and transparent permit allocation system. The e-marketplace of is promoting the bidding round and is providing a selection of seismic and well data. This is in addition to the data package available on the Crown Minerals website: Selected digital seismic and well data for some of the blocks can be viewed on the website:

Seismic Australia Ltd. has reprocessed 11,000 km of 2D data covering the offshore area and is allowing all of the data to be viewed using consistent and phase-matched regional data. Selected seismic data may also be viewed via the IndigoPool site.

Bohai Bay sees exploration activity

China's state-owned CNOOC Ltd and its partners plan to start production from three oilfields in 2002 with a combined output of 140,000 b/d.

WC 13-1/13-2 is in the western South China Sea. It is due onstream in the first half of the year and will produce about 40,000 b/d.

The other two fields, PL 19-3 and QHD 32-6, are in the Bohai Bay off China's northeast coast. These fields are to come onstream in the second half of the year.

CNOOC has stated that 2002 output is targeted at 15 million BOE higher than 2001.

First exploration for Taiwan Strait

Taiwan's Chinese Petroleum Corp. (CPC) and CNOOC announced the finalizing of the first contract for joint exploration in the Taiwan Strait in January. At the end of October, CNOOC finalized negotiations for the 50/50 production-sharing contract to explore and produce oil in the Chaoshan block, 155 miles west of the Taiwan port of Kaohsiung.

China and Taiwan will have much closer economic ties once this deal is approved. CNOOC and CPC are expected to set up a joint venture to operate the Chaoshan block and drill two to three exploration wells.

The two companies have signed a preliminary pact outlining broad cooperation in areas including refining and exploration for overseas oil production. They also agreed to exchange data on hydrocarbon reserves in the Taiwan Strait.

Find offshore Vietnam

Vietsovpetro discovered new reserves in the South White Tiger area, 120 km off Ba Ria-Vung Tau province. Test drilling at Well 16 found commercial reserves near Vietsovpetro's production area in 165 ft water depth, a much more shallow depth than usually produces significant reserves. The company's current production accounts for 80% of Vietnam's crude oil output.

New JV makes exploration plans

In early January, a joint venture among the national oil companies of Malaysia, Indonesia, and Vietnam signed a contract to explore and develop oil and gas in two blocks offshore Vietnam. Two exploration wells are to be drilled on the blocks next year.

The new company is called Con Son Joint Operating Co. The PetroVietnam Investment & Development Co., a unit of PetroVietnam, will hold 40%, with Petronas Carigali Overseas Sdn. Bhd. (30%) and Pertamina (30%) as partners. The JV intends to form additional ventures to explore blocks in Malaysia and Indonesia later this year.

Japan pursues Philippine interests

Japan Petroleum is looking into E&P opportunities offshore the Philippines. The company has expressed interest in securing an exclusive geophysical survey and exploration contract for a site offshore the Visayas region. If this request is granted, it will be Japan Petroleum's first upstream venture in the Philippines.

Contract terms permit only the review of data compiled by the Philippine Department of Energy. The Philippine government is revising upstream licensing terms to attract more foreign investment. If the Philippine Congress approves the new licensing terms, companies will be allowed to offset losses in an unsuccessful exploration area with profits in a producing area. The department aims to complete the bill and present it to congress for review this year.

Brunei open to increased international investment

Two consortia of international oil companies submitted bids for two deepwater blocks in Brunei's Exclusive Economic Zone, opening a 10,000 sq km area to foreign investors. One consortium includes Shell, Mitsubishi Corp., and Conoco. The other is made up of TotalFinalElf, BHP Billiton, and Amerada Hess.

Early in November, Brunei set up a national oil company to consolidate and mobilize the industry.

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