Both companies were positive about the newly signed deal. "I think our future cooperation will prove that one plus one does not necessarily equal two, but could turn out to be more than three," said CNOOC General Manager Fu Chengyu who signed the agreement with CPC Chairman Wenent Pan in Beijing.
Pan explained that the bilateral cooperation between the two companies began in the 1990s and both sides have since established a good partnership. "Depending on how the joint effort goes, we might apply for opening a branch office on each other's territory to enhance cooperation," he added.
According to a CPC's statement, the agreements include a letter of intent for closer cooperation; a renewed contract on joint exploration of the Tainan Basin, off the Taiwan Strait's southern end, and the Chaoshan Sub-basin, off mainland China's Fujian Province; a joint study of the Nanjihtao Basin and the transfer to CPC of a 30-percent stake of CNOOC's exploration project in Kenya.
The letter of intent was deemed a breakthrough in cross-strait energy cooperation, under which both parties agreed to join hands in prospecting oil and gas overseas as well as collaborate on international projects either by launching joint bids or transferring stakes in each other's projects. CPC and CNOOC have also agreed to team up to expand the natural gas market, refine crude oil, trade crude and refined oil, exchange technological information and train personnel.
With regard to the renewal of the Tainan-Chaoshan petroleum contract, implemented at the end of 2002 and expired Dec. 21, 2008, the two oil producers believe the area, which contains oil and gas blocks, has a high growth potential. The agreement has been extended for another two years until the end of 2010.
In addition, the two companies have agreed to explore together the Nanjihtao Basin. The basin is close to the Taiwan Strait dividing line and is seen as a military sensitive region.
One of the agreements signed Dec. 26, 2008 marks out a 9,804-square-kilometer exploration area where both parties will conduct a joint geological data study for one year.
Through its international investment arm--the Overseas Petroleum and Investment Corp.--the CPC also took over 30 percent of CNOOC's stake in the onshore Block 9 in northern Kenya.
This brings the number of stakeholders in the Kenyan exploration project to three, with Sweden's Lundin Petroleum holding 30 percent as well, and CNOOC, which remains the operator, with 40 percent. The three stakeholders will form a well-drilling team in the near future.
The state-run CPC is a fully integrated oil and gas company, while CNOOC, a state-owned enterprise in mainland China, focuses on upstream exploration and production. These two oil producers joined hands as early as 1994.
Write to Ellen Ko at ellenko@mail.gio.gov.tw