China National Offshore Oil Corporation (CNOOC) has entered a cooperation project with Royal Dutch Shell (Shell), in which CNOOC purchased 25 percent interest in Shell’s BC9 and BCD10 blocks in Gabon. Herbert Smith is representing CNOOC.
CNOOC, China’s largest offshore oil producer, will reimburse Shell for 25 percent of certain past exploration costs and carry part of the future exploration costs. Shell will remain the operator with 75 percent interest. The agreement is subject to government approval.
The two oil companies, in the meantime, signed two production-sharing contracts to explore a pair of offshore oil blocks in the South China Sea. Shell is expected to undertake 100 percent of the exploration costs of blocks 62/02 and 62/17, which lie in the Yinggehai basin off China's Hainan Island. CNOOC will take up to 51 percent of equity interest in any commercial oil and gas discoveries from the blocks.
Lim Haw-Kuang, executive chairman of Shell Companies in China, said in a statement: “We are delighted about the return to offshore exploration in China and the opportunity to work with CNOOC again on a major project in the country…We are very pleased to have entered the farm-out agreement with CNOOC in Gabon. These new projects in partnership with Chinese companies are the latest showcase of our China strategy to work with our Chinese counterparts both in China and globally to help meet the country’s energy needs to fuel its fast growing economy.”
The Herbert Smith team was led by energy partners Hilary Lau and Bertrand Montembault.
"We are delighted to have had the opportunity to work with CNOOC again on upstream oil and gas deal with an international oil major in Africa. It reinforces our status as the preferred legal adviser for African oil and gas transactions," said Lau.
Liu Zhen is China senior journalist at ALB. Follow us on Twitter: @ALB_Magazine.
Other related stories: