Husky, CNOOC in South China Sea deal

Aug. 8, 2006 at 9:51 AM

CALGARY, Alberta, Aug. 8 (UPI) -- Canada's Husky Energy signed three petroleum contracts Tuesday with the China National Offshore Oil Corporation for exploring the South China Sea.

The three exploration blocks cover about 16,871 square kilometers, which includes an area by the Pearl River Mouth Basin, where Husky already has a block. The two other blocks are located in the Ying Ge Hai Basin, west of Hainan Island.

"The acquisition allows Husky to enhance its position and expand its exploration in natural gas prone basins, close to existing markets," said John Lau, chief executive of Husky.

Under the agreement, the Canadian company will drill one exploration well in each of the Ying Ge Hai blocks and two wells on the Pearl River block within the next three years. Husky will fully fund the exploration costs, while CNOOC will retain the right to back into any future development with a 51 percent interest.

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