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Large natural gasfield discovered offshore China

Japan watching if China breached deal in disputed gas field
Tokyo (AFP) Dec 9, 2009 - Japan is checking a report that China has built a drilling platform in a disputed offshore gas field in breach of a deal for joint development there, a government spokesman said Wednesday. Asia's two largest economies and top energy consumers last year said they would share the potentially lucrative gas resources in the East China Sea, an agreement that was struck after years of negotiations. Japanese companies would invest in China's development of the Chunxiao gas field, which Japan calls Shirakaba, both sides said in the agreement, which did not specify the cost of the project. But Japanese navy patrol planes have recently observed that China has built a drilling plant in the area and appears ready to start extracting gas, the Yomiuri Shimbun daily said, citing anonymous defence ministry officials. "We haven't confirmed that China has started developing the gas field. But we will carefully watch the issue, which is a very sensitive problem," Hirofumi Hirano, the chief cabinet secretary, told reporters.

"If the report is true, we will talk to China." China insists that its sovereign zone in the East China Sea extends close to Japan's southern Okinawa island and firmly rejected Tokyo's earlier proposals for a median line to settle the territorial dispute. China started drilling in Chunxiao (Shirakaba) in 2003, inflaming tensions with Japan, which voiced worries that Beijing may siphon gas from the deposit that stretches into what Japan considered its own side. Under last year's deal, Japan agreed to invest in one field in the area, and jointly develop Chunxiao (Shirakaba) with China. The agreement stipulated that talks would continue over other gas fields, but China has since insisted that it has the right to develop them. Japan in January launched an official protest over China's unilateral development of the nearby Tianwaitian gas field, which Tokyo contends should be untouched until talks settle its status.
by Staff Writers
 Shanghai (AFP) Dec 9, 2009
 Canada's Husky Energy Inc announced Wednesday it had discovered a significant deepwater gas reserve with its Chinese partner CNOOC, renewing exploration hopes in the South China Sea.

Based on preliminary analysis of drilling results, the discovery could provide more than 140 million cubic feet (four million cubic metres) of natural gas a day, the energy company said in a statement.

"This exciting exploration discovery ... is a significant milestone towards our goal of strategic commercial development and production from this promising area," Husky CEO and president John Lau said.

CNOOC Ltd, the Hong Kong-listed unit of CNOOC, also confirmed the discovery in a statement to the Hong Kong stock exchange.

The discovery, in the mouth of the Pearl River about 250 kilometres (150 miles) south of Hong Kong, will nearly double Husky's potential output rate in the area.

"We are very encouraged that our geological predictions regarding the potential of this area are being validated by our drilling programme," Lau said.

Exploration efforts in the South China Sea have largely disappointed since Husky found an estimated four to six trillion cubic feet of recoverable gas reserves in June 2006, with wells turning up dry and foreign companies returning blocs to CNOOC.

Most recently, US oil producer Devon Energy Corp said it wanted to sell its three deepwater blocks in the South China Sea as part of a broader pullout of offshore and international oil and gas operations to focus on its onshore assets in North America.

Devon did not find commercial quantities of crude oil or gas during its 2008 drilling campaign in a block next to where Husky made its 2006 discovery and its latest big find.

China National Offshore Oil Corp (CNOOC) has the right to participate in the development of any discovery for up to 51 percent working interest, Husky said.

-- Dow Jones Newswires contributed to this story --

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