Fresh from receiving renewed expansion permission from China's State Oceanic Administration, ConocoPhillips has entered into a set of agreements with PetroChina Company Ltd. whereby PetroChina will acquire an interest in two Western Australia exploration assets and establish a Joint Study Agreement for unconventional resource development in the Sichuan Basin.
Under these agreements, which still require government and partner approvals, PetroChina will acquire a working interest in the Poseidon offshore discovery in the Browse Basin, and in the Goldwyer Shale in the onshore Canning Basin. In addition, ConocoPhillips will enter into a Joint Study Agreement to identify unconventional resource reserves in the Neijiang-Dazu Block in China's Sichuan Basin.
China's State Oceanic Administration earlier this month granted ConocoPhillips permission to begin oil production in other locations not specified in these new agreements after operations stopped following two oil spills in June 2011.
ConocoPhillips and the China National Offshore Oil Corporation reportedly reached an agreement in early 2012 with China's Ministry of Agriculture under which CNY1 billion would be paid as compensation to settle public and private claims of potentially affected fishermen in relevant Bohai Bay Chinese communities. ConocoPhillips said the agreement fulfills the objectives of the compensation fund announced in September 2011 by the company.
ConocoPhillips China had two separate pollution incidents in June 2011 in Bohai Bay, where approximately 115 cubic meters of oil were released into the sea and 400 cubic meters of mineral oil based drilling mud were released onto the seabed. ConocoPhillips said at the time that it sincerely regrets the incidents in Bohai Bay, and accepts its responsibilities.
Under the terms of the new agreement this month with ConocoPhillips, PetroChina will acquire working interest in the two Australian projects; specifically 20% of Poseidon in the Browse Basin and 29% of Goldwyer in the Canning Basin.
Under the JSA, ConocoPhillips and PetroChina will study the potential for unconventional resource development in the approximately 500,000 acre Neijiang-Dazu Shale Block in the Sichuan Basin in China. The joint study will be an important step in evaluating the potential for unconventional resource exploration in the area. If technically and commercially viable, the companies will advance development under a production sharing contract, which would be agreed upon during the study period.
