US companies may bid for oil exploration projects in the disputed South China Sea, China’s largest offshore oil explorer, China National Offshore Oil Corp, said on Tuesday.
“US companies are displaying interest in bidding for the oil and gas projects, which have been progressing as scheduled,” CNOOC Chairman Wang Yilin said on the sidelines of the China-US Enterprises Investment and Cooperation Forum.
CNOOC, China’s third largest oil company, last month issued tenders seeking joint exploitation of nine offshore blocks in the South China Sea. The nine blocks cover more than 160,000 square kilometres and are 300-4,000 metres deep, according to a statement on CNOOC’s website.
Seven blocks are located in the Zhongjianan Basin and two are in areas covering parts of the Wan’an and Nanweixi basins, the company said.
The move came amid tension between the Philippines and China caused by their dispute over Huang yan Island. CNOOC will invest 200 billion yuan ($32 billion) in developing the South China Sea blocks over the next 20 years, with the aim of building an annual capacity of 50 million tons in the deep sea area by 2020.
Companies from a number of countries such as Malaysia and Thailand have displayed interest in developing these projects with CNOOC.
However, experts said that some large developers are still concerned about the investment return and the amount of reserves. “Capital and technology are the challenges for the development of China South Sea oil projects,” said Lin Boqiang, director of the China Centre for Energy Economics Research at Xiamen University.
Drilling of the first deepwater oil rig indicates that China’s deepwater drilling technology has improved, and shows that Chinese companies are closing the gap with major oil giants in the area of deepwater drilling, according to Lin. CNOOC set a target to increase oil and gas output to 120 million tons of oil equivalent by the end of 2020, double the amount in 2010.
China has 18,000 km of coastline and a continental shelf of 1.3 million sq km. The country’s rich offshore resources are mainly located in the Bohai Bay region, the East China Sea and theSouth China Sea.
The South China Sea is the world’s fourth-largest deepwater region for oil and gas exploration after the Gulf of Mexico, West Africa and Brazil. The South China Sea region has proven oil reserves of around 7.7 billion barrels, with an estimated 28 billion barrels in total. Natural gas reserves are estimated to total around 266trillion cubic feet.
Experts said offshore exploration will help reduce China’s dependence on oil imports.
