Economy

Markets

Industries

Insights

Reports

Events

CNOOC to share investment, risk on development of East China Sea

(Xinhua)
Updated: 2008-06-27 14:35

China National Offshore Oil Corp (CNOOC) plans to share investment and risk with Japanese companies in jointly developing gas and oil resources in the East China Sea in accordance with the principle of mutual benefit, according to Zhou Shouwei, the company's vice president.

"The oil circles from both China and Japan have held a positive attitude toward joint development in the area, and believe the consensus reached recently will benefit the peoples of the two countries," said Zhou during an exclusive interview with Xinhua on Thursday.

The Foreign Ministry announced June 18 that China and Japan had agreed to "make the first step in joint development" in the chosen area of the East China Sea in the transitional period before the delimitation of the relevant waters without prejudicing their respective legal positions.

Japan would also participate in the exploration of the Chunxiao oil and gas field in accordance with China's relevant laws.

"The development through cooperation is totally different from the joint development," Zhou said.

Those involved in the joint development will pay tax only to their own countries. All parties share equal investment, risk and profit. However, the development through cooperation is an act that should be done according to the law of the state owning the resources and tax should be paid to it.

Zhou said China's joint exploration of the South China Sea together with Vietnam and the Philippines since 2005 "is going smoothly."

China had more cases for the development through cooperation, Zhou said, noting British and Canadian companies were now conducting oil and gas cooperation in certain areas of the East China Sea.

Zhou said CNOOC, as a state company, welcomed Japanese legal persons to invest in the Chunxiao gas and oil field according to China's relevant laws on exploring for oil and gas in its territorial sea with a foreign counterpart.

"The cooperation will be reciprocal and comply with the commercial principles and the way that CNOOC normally cooperate with other foreign counterparts," he said.

The Chunxiao oil and gas field was discovered in 1995 in the Chinese territorial ocean. CNOOC, together with the China Petrochemical Corporation (Sinopec), signed a contract with Unocal Corporation and Shell in 2003 to jointly explore the Chunxiao field. CNOOC and Sinopec each made a 30 percent investment respectively, and Shell and Unocal, 20 percent respectively. The two foreign companies quit the contract one year later.

"We still hope to continue cooperation with foreign companies by paid transfer," Zhou said.

Zhou believed that offshore oil exploration is an industry of high technology, high riskiness and high investment, thus the resource nations usually choose to share risks with foreign countries through introducing foreign investment.

China and Japan has had a long history of oil cooperation.

The CNOOC has had a series of cooperation with several Japanese oil companies on Bohai, East China Sea and South China Sea and signed more than 10 oil contracts since 1982.

By April this year, the CNOOC has signed 186 oil contracts and agreements with 77 companies from 21 countries and regions. It is now implementing 40 oil contracts and agreements with 28 companies of 11 countries and regions.

The CNOOC has developed from a small company with an annual production ability of 90,000 tons of crude oil to an internationalized energy company which produces more than 40 million tons of oil annually.