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Husky, Cnooc Sign Accord on Liwan’s Funding, Operation

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Dec. 7 (Bloomberg) -- Husky Energy Inc., the Canadian oil company controlled by Hong Kong billionaire Li Ka-Shing, said it signed an agreement with Cnooc Ltd. formalizing the funding and operation of China’s first deepwater gas discovery.

Husky will operate the deepwater portion of Liwan 3-1 in the South China Sea, including drilling and developing links to a shallow-water platform, the Calgary-based company said in a statement. Cnooc will operate the shallow-water platform, pipelines to the shore and an onshore gas-processing plant.

The Toronto-listed company found natural gas at two fields in the South China Sea including Liwan 3-1, which could be China’s largest offshore deposit with more than 100 billion cubic meters (3.5 trillion cubic feet) of gas, according to government estimates in 2006. Cnooc and its partners may spend about 200 billion yuan ($30 billion) through 2020 to develop fuel reserves in the region, Cnooc said in 2008.

The development plan for Liwan may be submitted to Chinese regulators in early 2011, and production is expected in late 2013, according to Husky. The company said in February it expected to submit the plan early this year with approval to come within 2010.

Husky holds a 49 percent stake in Liwan, while Cnooc holds the rest. The field will produce 8 billion cubic meters a year initially and 20 billion cubic meters a year in the second phase, the official Xinhua News Agency reported in December 2009.

To contact the reporter on this story: Baizhen Chua in Beijing at bchua14@bloomberg.net

To contact the editors responsible for this story: Clyde Russell at crussell7@bloomberg.net.

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