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Block 22/12 - Beibu Gulf (30.00%)*

Background:

The Petroleum Contract for Block 22/12 was awarded to Bligh Oil and Minerals (later Horizon Oil Limited) in 2001 for an initial 4 years and has been extended twice so far to a total of 8 years.  Roc Oil farmed into the Block in 2002 to drill the Wei 6-12-1 well and also undertook operatorship.

Block 22/12 is a 364 sq km permit located in the Beibu Gulf offshore China in approximately 40 metres of water.  The block is located near several known oil fields, with the nearest productive field being Wei 12-1, located 1,800 meters from the Block 22/12 boundary.  Several discoveries have been made in the block; Wei 12-8-1 and Wei 12-3-1 by Total in the 1980’’s, Wei 12-8-2 and Wei 12-2-2 by CNOOC in the 1990’s and Wei 12-8-1 and Wei 6-12 South-1 in 2002 and 2006 respectively by the current joint venture.  None of these fields have been developed.  The block contains 58 mmbbls of oil in the Wei 6-12 and Wei 12-8 areas, with around 8 mmbbls in resources contingent on successful appraisal of the Wei 12-2 discovery.

Following the discoveries at Wei 6-12 and more significantly, Wei 6-12 South in 2006, Horizon Oil and its co-venturers commenced formulating appropriate development concepts in consultation with the China National Offshore Oil Corporation (‘CNOOC’).  This process has culminated so far in the approval by CNOOC of the field reserves report, and completion of various metocean and environmental impact studies.

Current activities:

The overall development plan (‘ODP’) is scheduled for submission to CNOOC prior to the end of the September 2008.  Submission of the ODP will effectively constitute the financial investment decision for the project.

The ODP envisages development of the Wei 6-12, Wei 6-12 South and Wei 12-8 West oil accumulations using an unmanned platform, a floating production, storage and offtake (‘FPSO’) vessel; with the Wei 12-8W field tied back to the platform via a pipeline.  This approach is favoured by the joint venture as it alleviates concerns regarding capacity constraints that may arise if existing infrastructure were to be utilised.

The key issues remaining in respect of the development are selection of a suitable FPSO vessel and Chinese government gas and water disposal requirements.

On the proposed development plan schedule oil production would commence in early 2010.

* CNOOC has a back in entitlement of up to 51% total equity in the field development. 

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