China's biggest offshore oil and gas producer China National Offshore Oil Co (CNOOC) is poised to kick off its first major drilling program in Australian waters as it seeks to match Japanese rival Inpex by establishing its own Australian production base.
According to its submission to the federal department of environment, CNOOC plans to drill three wells in the northern Bonaparte Basin, 500km north of Wyndham and 40km north west of the Bayu-Undan LNG project, in a 110 day program due to start later this quarter, pending final environmental approval.
The Chinese group was awarded the extremely prospective WA-406-P permit, which abuts the Joint Development Area with East Timor, in late 2007 after outbidding two rival explorers with a two-stage exploration program worth more than $160 million.
The guaranteed first stage program, worth $80.8 million, will include up to five wells and 400 square kilometres in 3-D seismic work. Depending on the results of the initial work, CNOOC will undertake a secondary program of five wells and additional 3-D seismic.
The commencement of drilling will be a major milestone for CNOOC, which has been leading China's global push to secure long-term energy supplies.
CNOOC became China's first direct participant in the Australian LNG industry when it acquired a 5.3 per stake in the Woodside-operated North West Shelf gas fields as part of a landmark 25 year LNG supply deal struck in 2002.
CNOOC has also just moved into the gas-rich Browse Basin by acquiring a 25 per cent stake in four permits operated by BHP Billiton in April.
The Browse Basin is home to several prospective LNG ventures, including Inpex's flagship Ichthys development, Woodside's $30 billion Browse project and Shell's $3 billion Prelude Floating LNG venture.
