The preliminary appraisal results of Panyu 30-1 and Panyu 34-1 discoveries made late last year have confirmed and delineated the scope for recovery of natural gas reserves estimated to be around 1.5 trillion cubic feet.
Although a relatively small discovery compared to the size of the market it will add to the level of self sufficiency for the Chinese Eastern seaboard with the possibility of affecting gas pricing for future sales.
"It represents the first major natural gas discovery in the Pearl River Mouth of South China Sea, which opens new exploration prospects in the area," said Zhou Shouwei, president of CNOOC.
"These new discoveries will provide reliable and increased natural gas supplies to a region with significant gas demand. The future gas supply will help fuel the local economic growth and create a cleaner environment. They will enhance the dominant gas supply business CNOOC has been developing," said Wei Liucheng, chairman and CEO of CNOOC.
"Natural gas business is a new and increasingly visible growth engine for cash flow and earnings of CNOOC Limited."
The preliminary development plan calls for an integrated design to add productions from smaller reserves in the area and to target the fast growing Guangdong market. The initial capital expenditure for the project is estimated to be around $US500 million.
The gas will be delivered to Zhuhai area and Macao via submerged pipelines, starting in 2006 or 2007, and is expected to be supplied to a power plant owned by CNOOC's parent, China National Offshore Oil Corporation, in Zhongshan.
CNOOC Limited owns 100% of both Panyu 30-1 and Panyu 34-1.
