Husky, CNOOC find big China oil/gas field

Husky, controlled by Hong Kong billionaire Li Ka-shing, said on Wednesday the well could contain 4-6 trillion cubic feet (113.3 billion to 169.9 billion cu m) of recoverable resources, a form of preliminary estimate.

Merrill Lynch called it new evidence of terrific potential of offshore China.

In comparison, China’s largest-ever onshore gas discovery, according to second-largest oil firm Sinopec Corp., came to just over 250 billion cubic meters of recoverable reserves.

CNOOC’s Hong Kong shares were trading 4.8 percent higher at HK$ 5.50 by midday, outperforming the wider market’s 0.7 percent climb. It had earlier surged as much as 8.6 percent, marking the biggest single-day gain since June 28, 2005.

Shares in Hutchison Whampoa Ltd., which controls 35 percent of Husky, inched up 0.5 percent to HK$ 68.75. Shares in China Oilfield, which provides drilling and other services to sister firm CNOOC Ltd. had shot up nearly 7 percent at HK$ 3.45, as investors bet on increased demand.

Husky’s partner is China National Offshore Oil Corp., parent of listed CNOOC Ltd., but in line with usual practice in China, the listed unit has the right to take a 51 percent stake in any project to develop the field.

Merrill Lynch said that a 51 percent stake would translate into 500 million barrels of oil equivalent, or about an eighth of CNOOC’s total reserves, if a 45 percent interest in a license to operate a field in Nigeria were to be included.

CNOOC made its largest overseas acquisition in Nigeria this year.

CNOOC, a state-owned offshore oil specialist unlike onshore rivals PetroChina Co. Ltd. and Sinopec, has long lacked expertise and experience in deep-water exploration, often costlier and technologically more intricate than shallow water exploration.

It intends to partner foreign firms in this sector to garner in-house expertise.

Husky said the well, located on Block 29/26, 250 km (155 miles) south of Hong Kong, is the first deep-water discovery off China’s coast.

Using 2-D seismic data, the Canadian oil company drilled the well, called Liwan 3-1-1, to a depth of 3,843 metres (12,610 ft), encountering 56 m of net gas pay, Husky said. It plans to conduct a 3-D seismic survey to determine where to drill next.