CNOOC awards contract for oil field in South China Sea

June 1 (UPI) -- A contract for subsea work at an oil field in the South China Sea could help unlock hundreds of millions of barrels of oil reserves, TechnipFMC announced.

The oil and gas services company said it was awarded a contract by China National Offshore Oil Corp., the largest offshore oil and gas producer in China, for subsea components for the development of the Liuhua oil field in the South China Sea.

"We are proud and honored to be selected by CNOOC Ltd. for this contract, which is one of the largest subsea production systems contracts awarded this year in our industry," Hallvard Hasselknippe, the president of TechnipFMC's subsea business, said in a statement.

The South China Sea is a source of multilateral contentions. The island is under Chinese control, but Vietnam and Taiwan have overlapping claims in the area. For the first time, the Chinese military landed a strategic bomber on an island reef in the South China Sea in May, drawing criticism from the U.S. Department of Defense.

According to consultant group Wood Mackenzie, however, the Liuhua oil field is not located in the disputed maritime zone.

"We modeled 130 million commercial reserves for Liuhua," Andrew Harwood, a research director at Wood Mackenzie, said Friday in response to UPI's questions.

TechnipFMC has faced lingering markets pressures as the oil and gas sector recovers. Full-year 2018 spending is outlined at $300 million, a 17 percent increase from last year.

CNOOC reported total net production of 120.1 million barrels of oil equivalent in the first quarter, an increase of 0.8 percent from the same period last year. The company said its offshore production, however, declined 1.2 percent year-on-year because of "normal decline of the producing fields."

No terms of the CNOOC-TechnipFMC contract were disclosed.