SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
For February 20, 2006
CNOOC Limited
(Translation of registrant's name into English)
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65th Floor
Bank of China Tower
One Garden Road
Central, Hong Kong
(Address of principal executive offices)
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(Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F)
Form 20-F |X| Form 40-F |_|
(Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.)
Yes |_| No |X|
(If "Yes" is marked, indicate below the file number assigned to the registrant
in connection with Rule 12g3-2(b): N/A.)
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THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION
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If you are in any doubt as to any aspect of this circular or as to the action
to be taken, you should consult a stockbroker or other registered dealer in
securities, a bank manager, solicitor, professional accountant or other
professional adviser.
If you have sold or transferred all your shares in CNOOC Limited you should at
once pass this circular to the purchaser or to the bank, stockbroker or other
agent through whom the sale was effected for transmission to the purchaser.
The Stock Exchange of Hong Kong Limited takes no responsibility for the
contents of this circular, makes no representation as to its accuracy or
completeness and expressly disclaims any liability whatsoever for any loss
howsoever arising from or in reliance upon the whole or any part of the
contents of this circular.
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[LOGO OMITTED]
CNOOC Limited
[CHINESE CHARACTERS OMITTED]
(Incorporated in Hong Kong with limited liability under the Companies
Ordinance)
(Stock Code: 883)
DISCLOSEABLE TRANSACTION
RELATING TO
ACQUISITION OF INTERESTS IN
OFFSHORE NIGERIAN OIL MINING LICENSE
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20 February 2006
CONTENTS
Page
Definitions ................................................................1
Letter from the Board ......................................................4
Appendix I - General Information ..........................................11
Appendix II - Information on oil and gas properties of the Group ..........15
2
DEFINITIONS
In this circular, unless the context otherwise requires, the following
expressions have the following meanings:
"Acquisition" the proposed acquisition of the Transferred Interest
pursuant to the Sale and Purchase Agreement
"Announcement" the announcement of the Company dated 9 January 2006
"Brasoil" Brasoil Oil Services Company Nigeria Limited, a company
established under the laws of the Federal Republic of
Nigeria and a subsidiary of Petr|$$|Aaoleo Brasileiro S.A.
(a petroleum company based in Brasil)
"Company" CNOOC Limited, a company incorporated in Hong Kong with
limited liability, the shares of which are listed on the
Hong Kong Stock Exchange and whose American Depository
Shares are listed on the New York Stock Exchange
"Deed of a parent company guarantee dated 8 January 2006 issued by
Guarantee" the Company in favour of the Seller, under which the
Company has agreed to guarantee the performance of all the
obligations of the Purchaser under the Sale and Purchase
Agreement
"Directors" the directors of the Company
"Effective Date" 00.01 hours, Lagos Nigeria time (07.01 hours, Hong Kong
time), 1 July 2005
"Group" the Company and its subsidiaries
"HK$" Hong Kong dollars, the lawful currency of Hong Kong
"HOA" the Heads of Agreement entered into between NNPC, TUPNI,
Brasoil and the Seller dated 25 April 2005 relating to
NNPC's entry into OML 130
"Hydrocarbons" includes crude oil but also other related substances
"Independent Third an independent third party not connected with the
Party" Directors, chief executive or substantial shareholders
of the Company or any of its subsidiaries or their
respective associates (as defined under the Listing Rules)
"Latest 16 February 2006, being the latest practicable date prior
Practicable to the printing of this circular for ascertaining certain
Date" information herein
"LIBOR" the display rate per annum of the offered quotation for
deposits in US Dollars for a period of one month which
appears on Telerate Page 3750 (or such other page as the
Parties may agree) at or about 11.00 am London time on the
business day immediately prior to 1 January 2006 and
thereafter on the first day of each month in the period
until completion of the Sale and Purchase Agreement, or,
if such day is not a business day in London, on the last
business day in London prior to such day
"Listing Rules" The Rules Governing the Listing of Securities on the Stock
Exchange
"MMB" millions of barrels of hydrocarbons\
"Nigeria" the Federal Republic of Nigeria
"NNPC" the Nigerian National Petroleum Corporation, a company
established under the laws of the Federal Republic of
Nigeria
"OML 130" the oil mining lease granted by the Nigerian Minister of
Petroleum Resources to NNPC, TUPNI, Brasoil and the Seller
by a letter dated 24 February 2005 in respect of the area
covered by the OML 130
"P50" Recoverable volumes of hydrocarbons in a basin that can be
estimated through a probabilistic analysis method and
categorised according to the level of risk connected with
the projection. Recoverable volumes are categorized as P50
when a 50% probability exists that recovered volumes will
be equal or higher than the original estimates. The
concept of P50 recoverable volumes estimates is different
to the concept of "probable" (P2) reserves estimates. More
generally, the concept of recoverable volumes differs from
the concept of reserves as the calculation of reserves
requires an economic analysis associated with it. Such
analysis is not performed in the estimation of recoverable
volumes
"PRC" The People's Republic of China
3
"Production the agreement dated 26 April 2005 entered into between the
Co-ordination Seller, TUPNI and Brasoil to co-ordinate decisions
Agreement" relating to operations in the area covered by OML 130
"PSA" the production sharing agreement between TUPNI, the Seller
and Brasoil dated 26 April 2005 governing the funding and
operations related to the 50% combined interest of TUPNI,
Brasoil and the Seller in OML 130
"PSC" the Production Sharing Contract dated 25 April 2005 and
entered into by NNPC of the one part and the Seller of the
other part as Contractor and TUPNI as operator relating to
NNPC's fifty per cent (50%) interest in OML 130 offshore
Nigeria and the rights and obligations of the Contractor
and TUPNI in respect of the funding and the conduct of
petroleum operations on behalf of NNPC
"PSC Operating the operating agreement dated 25 April 2005, and entered
Agreement" into between the Seller and TUPNI relating to the conduct
of operations under the PSC
"Purchaser" CNOOC Exploration & Production Limited, a company
established under the laws of the Federal Republic of
Nigeria and an indirect wholly-owned subsidiary of the
Company
"Sale and Purchase the Sale And Purchase Agreement dated 8 January 2006
Agreement" relating to the sale by the Seller of 90% of its interests
as contractor under the PSC
"Seller" South Atlantic Petroleum Limited, a private company
established under the laws of the Federal Republic of
Nigeria
"Stock Exchange" The Stock Exchange of Hong Kong Limited
"Transferred all of the rights, benefits, interests and obligations
Interest" attaching to and forming part of (1) 90% interest of the
Seller's interest as a Contractor in and under the PSC,
(2) the Seller's 90% participating interest in and under
the PSC Operating Agreement, (3) all of the corresponding
rights, interests and obligations under the Production
Co-ordination Agreement, and (4) all of the corresponding
rights, benefits and interests under the HOA
"TUPNI" Total Upstream Nigeria Limited, a company established
under the laws of the Federal Republic of Nigeria, its
successors and permitted assigns, a subsidiary of TOTAL
S.A. (a petroleum company based in France)
"US Dollar" or the lawful currency of the United States of America
"US$"
For the purpose of this circular, unless otherwise indicated, the translations
of Hong Kong dollars into US dollars have been made at the rate of HK$7.8 to
US$1. These translations are for the purposes of illustration only and no
representation is made by the Company that any amounts in Hong Kong dollars
and US dollars can be or could have been converted at the above rate or any
other rates or at all.
4
LETTER FROM THE BOARD
[LOGO OMITTED]
CNOOC Limited
[CHINESE CHARACTERS OMITTED]
(Incorporated in Hong Kong with limited liability under the Companies
Ordinance)
(Stock Code: 883)
Board of Directors: Registered office:
Fu Chengyu (Chairman) 65/F, Bank of China Tower
Luo Han 1 Garden Road
Zhou Shouwei Central
Cao Xinghe Hong Kong
Wu Zhenfang
Wu Guangqi
Yang Hua
Sung Hong Chiu*
Kenneth S. Courtis*
Evert Henkes*
Tse Hau Yin, Aloysius*
Lawrence J. Lau*
* Independent non-executive Directors
20 February 2006
To the Shareholders
Dear Sir or Madam,
DISCLOSEABLE TRANSACTION
RELATING TO
ACQUISITION OF INTERESTS IN
OFFSHORE NIGERIAN OIL MINING LICENSE
1. INTRODUCTION
The Board announced in the Announcement that on 8 January 2006, the Purchaser
entered into the Sale and Purchase Agreement with the Seller under which it
will acquire from the Seller certain contractual benefits, interests and
obligations held by the Seller as contractor in respect of the PSC covering a
50% interest in OML 130 offshore Nigeria. The aggregate cash consideration
required to be paid by the Purchaser under the Sale and Purchase Agreement is
approximately US$2.268 billion (approximately HK$17.69 billion), subject to
adjustments as described below. The Company has agreed to guarantee the
obligations of the Purchaser under the Sale and Purchase Agreement and going
forward, will also guarantee the obligations of the Purchaser under the PSC.
The Acquisition constitutes a discloseable transaction of the Company under
Chapter 14 of the Listing Rules. The purpose of this circular is to provide
the shareholders of the Company with further information regarding the
Acquisition.
2. THE SALE AND PURCHASE AGREEMENT
Date
8 January 2006
5
Parties
Seller: South Atlantic Petroleum Limited, a
privately held company established under
the laws of the Federal Republic of
Nigeria
Purchaser: CNOOC Exploration & Production Limited, a
company established under the laws of the
Federal Republic of Nigeria and an
indirect wholly-owned subsidiary of the
Company
Summary
On 8 January 2006, the Purchaser entered into the Sale and Purchase Agreement
with the Seller under which it will acquire from the Seller certain
contractual benefits, interests and obligations held by the Seller as
contractor in respect of the PSC covering a 50% interest in OML 130 offshore
Nigeria - please refer to the paragraph headed "Background to and Reasons for
the Acquisition" below for further details. Upon completion, the sale and
purchase will be deemed for all purposes to be made with effect from the
Effective Date, being 1 July 2005. The Effective Date was part of the auction
structure set by the Seller, as 1 July 2005 was the date at which the most
recent technical and financial information was available prior to the launch
of the auction process.
Under the Deed of Guarantee entered into between the Company and the Seller,
the Company has agreed to guarantee all of the Purchaser's obligations under
the Sale and Purchase Agreement. In relation to the requirement that NNPC
grants its consent to the assignment of the 90% interest under the PSC to the
Purchaser (being a condition of completion of the Sale and Purchase
Agreement), the Company has also agreed to enter into a separate deed of
guarantee in favour of NNPC, to guarantee the obligations of the Purchaser
under the PSC.
Consideration
The aggregate cash consideration required to be paid by the Purchaser under
the Sale and Purchase Agreement is US$2.268 billion (approximately HK$17.69
billion), subject to adjustments as described below. The cash consideration
comprises a payment of US$1.75 billion (approximately HK$13.65 billion) to the
Seller and a payment of US$518 million (approximately HK$4,040 million) to
TUPNI and Brasoil on behalf of the Seller, being repayment of advances made by
TUPNI and Brasoil on behalf of the Seller. The consideration will be funded
from the internal resources of the Company.
The consideration above will be adjusted by (i) an adjustment calculated with
reference to LIBOR plus a margin varying between 0% and approximately 3% and
(ii) additional advances made on behalf of the Seller under the PSC Operating
Agreement, in each case for the period between the Effective Date and the date
of completion.
The consideration was determined after arms' length negotiations between the
parties following an auction process, taking account of the results of the
Company's legal, financial and technical due diligence and by reference to
factors including the characteristics of the basin, its production prospects
and other relevant benchmarks. No independent valuation report has been
prepared for OML 130.
Conditions
The Agreement is conditional on, amongst other things:
(a) ....the receipt of the unconditional written consent of NNPC under the PSC
to the assignment to the Purchaser of the Seller's 90% interest as a
contractor under the PSC; and
(b) ....the receipt of the consent of the Government of the PRC to the
acquisition of the Transferred Interest by the Purchaser pursuant to the Sale
and Purchase Agreement.
If the conditions precedent are not satisfied within six months of the date of
the Sale and Purchase Agreement (or such later date as the Purchaser and the
Seller shall agree in writing), either the Seller or the Purchaser may
terminate the Sale and Purchase Agreement. As at the Latest Practicable Date,
the condition precedent as set out in sub-paragraph (b) above has been
satisfied.
6
Deposit and Escrow arrangement
A deposit of US$235 million (approximately HK$1,833 million) was paid by the
Purchaser to a mutually agreed escrow agent, Meespierson Intertrust
(Singapore) Ltd., on 9 January 2006. Subject to Completion of the Sale and
Purchase Agreement, this deposit will be released to the Seller and the
remainder of the adjusted purchase price will be paid by the Purchaser.
Meespierson Intertrust (Singapore) Ltd. is a company incorporated in Singapore
and wholly-owned by Fortis Bank S.A./N.V..
Completion
Completion is expected to occur as soon as reasonably practicable and in any
event no later than ten business days after the date on which the Seller shall
have given notice of satisfaction of all of the conditions precedent, which is
expected to occur during the first half of 2006.
3. BACKGROUND TO AND REASONS FOR THE ACQUISITION
Background to OML 130
OML 130 covers an area of approximately 500 square miles offshore Nigeria and
is a deepwater block with water depths ranging around 1,100 m to 1,800 m. OML
130 contains the Akpo field, which was discovered in 2000 and is currently
under development. Besides Akpo, OML 130 contains three other significant
discoveries: Egina, Egina South and Preowei. The OML 130 area also contains a
range of further exploration prospects.
Akpo's P50 liquid recoverable volumes have been estimated by TUPNI, the
operator of OML 130, to be approximately 600MMB, with potential for additional
P50 recoverable oil in excess of 500 MMB for the whole OML130 area. The
Company does not currently have P50 estimates for recoverable volumes in
respect of its own oil and gas properties, as such estimates are not
consistent with disclosure requirements of the US Securities and Exchange
Commission applicable to the Company, and discloses exclusively "proven" (P1)
reserves. Please refer to Appendix II "Information on oil and gas properties
of the Group" for details.
According to the estimates prepared by TUPNI, first production (meaning
commencement of production of oil available for sale) from the Akpo field in
OML 130 is currently expected in the second half of 2008. TUPNI, the operator
under the PSC, has estimated that the Purchaser's share of the amount of
capital expenditure required to develop the Akpo plan is approximately US$2.25
billion (approximately HK$17.55 billion). The Purchaser expects to be able to
recover this amount when production commences.
OML 130 is covered by the PSC and the PSA, each of which relates to a 50%
interest in OML 130. The PSC is between NNPC, the Seller and TUPNI. The Seller
is the sole contractor and holds benefits, interests and obligations under the
PSC. Under the Sale and Purchase Agreement, the Purchaser has agreed to
acquire 90% of all of the Seller's said benefits, interests and obligations as
contractor under the PSC. Therefore, after completion of the Acquisition, the
Company will effectively own a 45% economic interest in the whole of OML 130.
OML 130 is operated by TUPNI. The Purchaser will not acquire any interests in
the PSA under the Sale and Purchase Agreement. Under the PSC and PSA, 50% of
the production attributable to OML 130 and 50% of all costs of joint operation
in respect of OML 130 are allocated to each of the PSC and PSA respectively.
Reasons for the Acquisition
The Company made the Acquisition to gain access to a field of significant size
and considerable upside potential, located in one of the world's most prolific
oil and gas basins. In particular, the Acquisition perfectly fits the
Company's strategy to pursue long term growth while diversifying
geographically its reserves.
Financial effects of the Acquisition
The consideration will be funded from the internal resources of the Company
and the acquisition cost will be capitalised and the PSC interest will be
accounted for as an acquisition in the accounts of the Purchaser in accordance
with the Group's published accounting policies. Accordingly, the Acquisition
will result in an increase in the Group's oil and gas properties and other
related assets and liabilities (based on purchase price allocation after the
transaction is completed in accordance with the requirements of Hong Kong
Financial Reporting Standard 3 "Business Combinations"), and a decrease in the
amount of US$2.268 billion (approximately HK$17.69 billion) (subject to
adjustments as described above) of the Group's cash and cash equivalent upon
completion of the Acquisition.
In terms of expected impact of the acquisition on the Company's earnings, the
Company will account for its
7
interest in OML 130 based on its share of income and expense of the PSC
through the Purchaser, an indirectly wholly owned subsidiary. In light of OML
130's current stage of development, no positive contribution to the Company's
earnings is expected until 2008.
4. RIGHTS AND OBLIGATIONS OF THE PURCHASER UNDER THE PSC AND ANCILLARY
AGREEMENTS
Upon completion of the Acquisition, the Purchaser will become a party to the
PSC, the PSC Operating Agreement and the Production Co-Ordination Agreement.
The Seller's benefits, interests and obligations in respect of the Transferred
Interest will be assigned to the Purchaser under a separate assignment to be
signed upon completion of the Sale and Purchase Agreement. In addition, the
Seller's benefits, interests and obligations in respect of the PSC Operating
Agreement and the Production Co-ordination Agreement relating to the
Transferred Interest will be novated to the Purchaser under separate novation
agreements to be signed upon completion of the Sale and Purchase Agreement.
Currently, under the PSC, the "contractor" is granted a 100% contractual
participating interest under the PSC. The contractor, in this case the Seller,
is currently required to fund 100% of operations costs in respect of the PSC,
and is entitled to share in the hydrocarbon production under OML 130. TUPNI,
the operator under the PSC, has been appointed by the contractor to manage all
exploration and production work under a production sharing contract. TUPNI is
not entitled to share in hydrocarbon production by virtue of its appointment
as operator under the PSC.
The PSC
The Seller and the Purchaser as the contractors under the PSC will have the
right to lift and freely export crude oil produced from OML 130. Under the
PSC, the Purchaser as contractor effectively bears 45% of all costs and
expenses of joint operations in respect of OML 130 and can recover these costs
against revenues from the sale of petroleum produced. After recovery of costs
and payment of all applicable taxes, the contractors will be entitled to a
share of profit oil produced from OML 130 under the PSC as follows:
(i) oil in the production range of 0-350MMB, the contractor will accrue 70.0%
of such oil;
(ii) oil in the production range of 351-750MMB, the contractor will accrue
65.0% of such oil;
(iii) oil in the production range of 751-1000MMB, the contractor will accrue
52.5% of such oil;
(iv) oil in the production range of 1001-1500MMB, the contractor will accrue
45.0% of such oil; and
(v) oil in the production range of 1501-2000MMB, the contractor will accrue
35.0% of such oil.
The contractors' share will be negotiable for oil in the production range
above 2000MMB. The above percentages are comparable to other deep water
offshore production sharing contract terms in Nigeria.
As noted above, the PSC entitlement to hydrocarbons is 50% of production under
OML 130 and the Transferred Interest being acquired by the Purchaser
represents 90% of the total contractors' interest under the PSC.
The term of the PSC is 20 years from the date of the PSC, subject to renewal
and customary termination provisions. In accordance with Petroleum Act, Cap
P10 of the Federation of Nigeria 2004, under the PSC, 50% of the area covered
by OML 130 shall be relinquished 10 years after the grant of OML 130. The
precise area to be relinquished is subject to agreement between NNPC, the
contractor and the Nigerian Department of Petroleum Resources (the regulator
of the Nigerian oil and gas industry).
The contractors under the PSC will also be responsible for all operational
matters relating to the PSC share of OML 130, although such responsibility is
currently sub-contracted to TUPNI under the PSC Operating Agreement. TUPNI is
the operator across all of OML 130.
PSC Operating Agreement
At completion, the Purchaser will acquire rights and obligations under the PSC
Operating Agreement. The PSC Operating Agreement appoints and contains rights
to remove TUPNI as operator in respect of the PSC. The PSC Operating Agreement
is coterminous with the PSC.
The PSC Operating Agreement also gives the Purchaser representation (with the
right to appoint one out of two representatives) on the PSC operating
committee, which is responsible for approving all aspects of the joint
8
operations under the PSC. All important decisions of the PSC operating
committee must be made by unanimous vote.
Production Co-Ordination Agreement
At completion, the Purchaser will also acquire rights and obligations under a
Production Co-ordination Agreement. The Production Co-ordination Agreement
regulates the various decisions of the operating committees under the PSC and
the PSA relating to joint operations for OML130.
The Purchaser will participate in a co-ordination committee established under
the Production Co-ordination Agreement (with the right to appoint one out of
four representatives). The co-ordination committee includes all parties under
the PSC and the PSA as members. All decisions of the co-ordination committee
are required to be unanimous.
5. GENERAL
The principal business activity of the Company is investment holding. The
Group principally engages in the exploration, development, production and
sales of crude oil and natural gas and other petroleum products.
The principal business activity of the Seller is the exploration, development,
production and sales of crude oil and natural gas and other petroleum
products.
To the best of the knowledge, information and belief of the Company, and
having made all reasonable enquiries, the Seller and its ultimate beneficial
owner, as well as NNPC, TUPNI, Brasoil and Meespierson Intertrust (Singapore)
Ltd., are Independent Third Parties.
The Company is advised by Goldman Sachs (Asia) L.L.C. in relation to the
Acquisition. The Acquisition constitutes a discloseable transaction of the
Company under Chapter 14 of the Listing Rules.
Shareholders and potential investors should be aware that the implementation
of the Acquisition is subject to the conditions to the Sale and Purchase
Agreement being fulfilled (or waived, as applicable), and the Acquisition may
or may not be completed. Shareholders and potential investors are reminded to
exercise caution when dealing in the Company's securities.
6. ADDITIONAL INFORMATION
Your attention is drawn to the additional information set out in the appendix
to this circular.
Yours faithfully,
For and on behalf of the Board
CNOOC Limited
Fu Chengyu
Chairman
9
APPENDIX I GENERAL INFORMATION
1. RESPONSIBILITY STATEMENT
This circular includes particulars given in compliance with the Listing Rules
for the purpose of giving information with regard to the Company. The
Directors collectively and individually accept full responsibility for the
accuracy of the information contained in this circular and confirm, having
made all reasonable enquiries, that to the best of their knowledge and belief,
there are no other facts the omission of which would make any statement herein
misleading.
2. DISCLOSURE OF INTERESTS
As at the Latest Practicable Date, the interests of each Director and chief
executive of the Company in the equity or debt securities of the Company or
any associated corporations (within the meaning of the SFO) which (i) where
required to be notified to the Company and the Stock Exchange pursuant to
Divisions 7 and 8 of Part XV of the SFO (including interests and short
positions which they are taken or deemed to have under such provisions of the
SFO), (ii) where required, pursuant to section 352 of the SFO, to be entered
in the register referred to therein or (iii) where required, pursuant to the
Model Code for Securities Transactions by Directors of Listed Issuers, to be
notified to the Company and the Stock Exchange were as follows:
Interests in share options granted by the Company
Name of Grantee Date of Exercise Underlying
Grant Price shares
granted
pursuant
to options
(HK$)
Fu Chengyu 12 March 1.19 1,750,000
2001
27 August 1.232 1,750,000
2001 2.108 1,150,000
24 February
2003
5 February 3.152 2,500,000
2004
31 August 5.62 3,500,000
2005
Luo Han 12 March 1.19 1,400,000
2001
27 August 1.232 1,150,000
2001
24 February 2.108 1,150,000
2003
5 February 3.152 1,150,000
2004
31 August 5.62 1,610,000
2005
Zhou Shouwei 12 March 1.19 1,400,000
2001
27 August 1.232 1,750,000
2001
24 February 2.108 1,750,000
2003
5 February 3.152 1,750,000
2004
31 August 5.62 2,450,000
2005
10
Cao Xinghe 31 August 5.62 800,000
2005
Wu Zhenfang 31 August 5.62 800,000
2005
Wu Guangqi 31 August 5.62 1,610,000
2005
Yang Hua 12 March 1.19 1,150,000
2001
27 August 1.232 1,150,000
2001
24 February 2.108 1,150,000
2003
5 February 3.152 1,150,000
2004
31 August 5.62 1,610,000
2005
Chiu Sunghong 5 February 3.152 1,150,000
2004
Evert Henkes 5 February 3.152 1,150,000
2004
Kenneth S Courtis 5 February 3.152 1,150,000
2004
Save as disclosed above, as at the Latest Practicable Date, none of the
Directors and chief executive of the Company was interested in the equity or
debt securities of the Company or any associated corporations (within the
meaning of the SFO) which (i) where required to be notified to the Company and
the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO
(including interests and short positions which they are taken or deemed to
have under such provisions of the SFO), (ii) where required, pursuant to
section 352 of the SFO, to be entered in the register referred to therein or
(iii) where required, pursuant to the Model Code for Securities Transactions
by Directors of Listed Issuers, to be notified to the Company and the Stock
Exchange.
3. SUBSTANTIAL SHAREHOLDER
As at the Latest Practicable Date, so far as was known to the Directors and
chief executive of the Company, the persons, other than a Director or chief
executive of the Company, who had an interest or a short position in the
Shares and underlying Shares which would fall to be disclosed to the Company
under the provisions of Divisions 2 and 3 of Part XV of the SFO were as
follows:
Name of substantial shareholder Number of shares Approximate
of the Company Directly held Indirectly percentage
held of the
total issued
shares
CNOOC (BVI) Limited 28,999,999,995 - 70.64%
Overseas Oil and Gas Corporation 5 28,999,999,995 70.64%
China National Offshore Oil
Corporation - 29,000,000,000 70.64%
Note: CNOOC (BVI) Limited is a wholly-owned subsidiary of Overseas Oil and Gas
Corporation, which in turn is a wholly-owned subsidiary of China National
Offshore Oil Corporation. Accordingly, CNOOC (BVI) Limited's interests are
recorded as the interests of Overseas Oil and Gas Corporation and China
National Offshore Oil Corporation.
All the interests stated above represent long positions. As at the Latest
Practicable Date, no short positions were
11
recorded in the Register of Interests in Shares and Short Positions required
to be kept under section 336 of the SFO.
Save as disclosed above, the Directors and chief executive of the Company are
not aware that there is any party who, as at the Latest Practicable Date, had
an interest or a short position in the Shares and underlying Shares which
would fall to be disclosed to the Company under the provisions of Divisions 2
and 3 of Part XV of the SFO, or who is, directly or indirectly, interested in
10% or more of the nominal value of any class of share capital carrying rights
to vote in all circumstances at general meetings of any other member of the
Group.
4. LITIGATION
Neither the Company nor any of its subsidiaries is engaged in any litigation
or arbitration of material importance and, so far as the Directors are aware,
no litigation or arbitration of material importance is pending or threatened
against the Company.
5. MATERIAL ADVERSE CHANGE
As at the Latest Practicable Date, the Directors are not aware of any material
adverse change in the financial or trading positions of the Company since 31
December 2004, the date to which the latest published audited financial
statement of the Company were made up.
6. SERVICE CONTRACTS
As at the Latest Practicable Date, none of the Directors had entered into any
service contract with the Company or any member of the Group (excluding
contracts expiring or determinable by the employer within one year without
payment of compensation (other than statutory compensation)).
7. INTERESTS OF DIRECTORS
(a) The Directors are not aware that any Director had, as at the Latest
Practicable Date, any interest in any business which competes or is likely to
compete, either directly or indirectly, with the business of the Group which
would be required to be disclosed under the Listing Rules.
(b) No Director is materially interested in any contract or arrangement
subsisting at the date hereof which is significant to the business of the
Group taken as a whole.
(c) Since 31 December, 2004, the date to which the latest published audited
consolidated accounts of the Group have been made up, none of the Directors
has, or has had, any direct or indirect interest in any assets which have been
acquired or disposed of by or leased to or which are proposed to be acquired,
disposed of by or leased to, any member of the Group.
8. GENERAL
(a) The registered office of the Company is situated at 65th Floor, Bank of
China Tower, 1 Garden Road, Hong Kong.
(b) The Company's registrar is Hong Kong Registrars Limited of Rooms
1712-1716, 17th Floor, Hopewell Centre, 183 Queen's Road East, Hong Kong.
(c) The company secretary of the Company is Mr. Cao Yunshi and the qualified
accountant of the Company is Mr. Li Feilong.
(d) The English text of this circular shall prevail over the Chinese text.
12
APPENDIX IIINFORMATION ON OIL AND GAS PROPERTIES OF THE GROUP
The following is a summary of the information on major oil and gas properties
held by the Group as at 31 December 2004, which has been extracted from the
2004 annual report of the Company.
MAJOR PROPERTIES UNDER PRODUCTION AND DEVELOPMENT
Block/Property Operator Partner The Company's 2004 Net Actual Net Reserves as
Interests Production Production of December 31,
(BOE/day) Oil Commencement 2004 (MM BOE)
(Bbls/day) Gas Year Oil (MM Bbls)
(Mmcf/day) Gas (Bcf)
Offshore China
Bohai Bay
Production
Liaoxi
Jinzhou 20-2 CNOOC Ltd. 100% 7,710 1992 41.0
Oil 2,698 Oil 12.1
Gas 30 Gas 173.2
Jinzhou 9-3 CNOOC Ltd. 100% 13,225 1999 27.1
Oil 12,116 Oil 23.9
Gas 7 Gas 19.3
Suizhong 36-1 CNOOC Ltd. 100% 60,475 1993 178.9
Chengbei Oil Fields CNOOC Ltd. 100% 4,523 1985 5.7
Boxi
Boxi Oil Fields(1) CNOOC Ltd. 100% 12,800 1997 15.3
Oil 11,195 Oil 12.3
Gas 10 Gas 18.4
Qinhuangdao 32-6
QHD32-6 CNOOC Ltd. ChevronTexaco 75.5% 22,429 2001 99.7
11/05
Penglai 19-3 ConocoPhillips Phillips Bohai 51% 8,871 2002 131.8
Bonan
Bozhong 34-2/34-4 CNOOC Ltd. 100% 1,886 1990 3.2
Bonan oil Fields CNOOC Ltd. 100% 2,107 2004 31.7
Oil 1,877 Oil 10.2
Gas 1 Gas 128.8
Bozhong 25-1/25-1S CNOOC Ltd. ChevronTexaco 83.8% 4,073 2004 190.5
04/36
Caofeidian 11-1/11-2 Kerr-McGee Sino-American Energy 51% 4,371 2004 39.8
Development
Liaoxi
Jinzhou 21-1 CNOOC Ltd. 100% 13.8
Oil 5.7
Gas 48.5
Luda 4-2/5-2/10-1(2) CNOOC Ltd. 100% 92.7
JZ25-1S CNOOC Ltd. 100% 74.2
Oil 30.7
Gas 260.5
Bozhong
Nanbao 35-2 CNOOC Ltd. 100% 75.7
Qinghuangdao
QHD 33-1 CNOOC Ltd. 100% 3.6
Boxi
Qikou 18-9 CNOOC Ltd. 100% 3.5
Oil 3.3
Gas 1.6
Caofeidian 18-1 CNOOC Ltd. 100% 1.7
Caofeidian 18-2 CNOOC Ltd. 100% 12.5
Oil 3.2
Gas 56.0
11/05
Penglai 25-6 ConocoPhillips Phillips Bohai 51% 10.7
04/36&05/36
13
Block/Property Operator Partner The Company's 2004 Net Actual Net Reserves as
Interests Production Production of December 31,
(BOE/day) Oil Commencement 2004 (MM BOE)
(Bbls/day) Gas Year Oil (MM Bbls)
(Mmcf/day) Gas (Bcf)
Offshore China
Bohai Bay
Production
Caofeidian 11-3/11-5 Kerr-McGee Energy 51% 1.5
Caofeidian 12-1/12-1S Kerr-McGee Energy/New Field 51% 12.8
Bonan
Bozhong 34-1/34-1S CNOOC Ltd. 100% 24.8
Bohai Bay Total 142,469 1,092.3
Oil 134,512 Oil 974.6
Gas 48 Gas 706.2
Eastern South China Sea
Production
16/08
Huizhou Oil Fields CACT Eni/ChevronTexaco 51% 15,596 1990 27.6
Oil 20.5
Gas 43.0
16/19
Huizhou 19-3/2/1 CACT Eni/ChevronTexaco 51% 247 2004 25.5
15/11
Xijiang 24-3 ConocoPhillips, Pecten 51% 15,979 1994 9.7
CNOOC Ltd.
15/22
Xijiang 30-2 ConocoPhillips, Pecten 40% 10,968 1995 5.4
CNOOC Ltd.
29/04
Liuhua 11-1 CNOOC Ltd. 100% 19,497 1996 11.4
16/06
Lufeng 13-1 JHN Japex/New Huanan/NMC 25% 2,851 1993 3.1
17/22
Lufeng 22-1 Statoil, CNOOC Statoil 25% 536 1997 1.1
Ltd.
15/34
Panyu 4-2/5-1 Devon Burlington 51% 31,315 2003 33.6
Development
Liuhua 07
Panyu 30-1 CNOOC Ltd. 100% 87.2
Oil 2.7
Gas 506.9
Panyu 33
Panyu 34-1 CNOOC Ltd. 100% 30.7
Oil 0.6
Gas 180.8
Xijiang 04
Xijiang 23-1 CNOOC Ltd. 100% 40.4
16/06
Lufeng 13-2 CNOOC Ltd. 100% 14.1
Eastern South 96,989 289.8
China Sea Total Oil 96,989 Oil 168.0
Gas 0 Gas 730.8
Western South
China Sea
Production
Yulin 35
Weizhou Oil Fields(3) CNOOC Ltd. 100% 27,832 1993 48.1
Oil 26,570 Oil 47.6
Gas 8 Gas 2.9
Yangjiang 31/32
Wenchang 13-1/13-2 CNOOC Ltd. Husky 60% 28,051 2002 37.0
Yinggehai
Yacheng 13-1 CNOOC Ltd. Kufpec BPCEPC 51% 25,403 1995 84.2
Oil 1,085 Oil 5.0
Gas 132 Gas 475.1
Changjiang 25
Dongfang 1-1 CNOOC Ltd. 100% 12,851 2003 233.4
Oil 167 Oil 3.2
Gas 76 Gas 1,381.0
Development
Yangjiang 31/32
Wenchang 8-3 CNOOC Ltd. 100% 11.6
Wenchang 14-3 CNOOC Ltd. 100% 11.0
Wenchang 15-1 CNOOC Ltd. 100% 22.9
Wenchang 19-1 CNOOC Ltd. 100% 26.1
Yinggehai
Yacheng 13-4 CNOOC Ltd. 100% 22.4
14
Block/Property Operator Partner The Company's 2004 Net Actual Net Reserves as
Interests Production Production of December 31,
(BOE/day) Oil Commencement 2004 (MM BOE)
(Bbls/day) Gas Year Oil (MM Bbls)
(Mmcf/day) Gas (Bcf)
Offshore China
Bohai Bay
Production
Oil 1.3
Gas 126.6
Ledong 01
Ledong CNOOC Ltd. 100% 83.2
Gas 499.2
Yulin 35
Weizhou 6-1 CNOOC Ltd. 100% 5.0
Weizhou 11-1 CNOOC Ltd. 100% 9.0
Weizhou 11-1N CNOOC Ltd. 100% 6.8
Weizhou 11-4N CNOOC Ltd. 100% 3.2
Western South 94,137 603.8
China Sea Total Oil 55,873 Oil 189.7
Gas 215 Gas 2,484.8
East China Sea
Production
Pinghu
Pinghu Gas Field CNOOC Ltd. 30% 4,963 1998 11.0
Oil 2,121 Oil 3.8
Gas 17 Gas 43.2
Development
Xihu Trough
Canxue CNOOC Ltd. Sinopec 50% 9.3
Oil 5.1
Gas 25.4
Duanqiao CNOOC Ltd. Sinopec 50% 7.7
Oil 2.2
Gas 32.8
Chunxiao CNOOC Ltd. Sinopec 50% 31.6
Oil 3.8
Gas 166.9
Tianwaitian CNOOC Ltd. Sinopec 50% 5.3
Oil 0.1
Gas 31.1
Baoyunting CNOOC Ltd. Sinopec 50% 19.2
Oil 4.6
Gas 87.5
Wuyunting CNOOC Ltd. Sinopec 50% 4.7
Oil 1.9
Gas 16.6
East China Sea Total 4,963 88.7
Oil 2,121 Oil 21.5
Gas 17 Gas 403.4
Offshore China Total 338,558 2,074.6
Oil 289,496 Oil 1,353.7
Gas 280 Gas 4,325.2
Indonesia
Malacca Strait PSC 2,016 1994 Oil 7.4
Indonesia SES.B.V 41,939 148.0
Oil 27,925 Oil 94.5
Gas 84 Gas 321.4
Total 382,513 2,230.0
Oil 319,436 Oil 1,455.6
Gas 364 Gas 4,646.6
1. The production and reserves for Qikou 18-2 that commenced operation during
the period was included under Boxi oil fields group.
2. Luda 10-1 commenced production ahead of the schedule in early 2005.
3. The reserves for Weizhou 12-1N Project was included under Weizhou oil
fields group.
REVIEW BY AREA
In 2004, the Company obtained outstanding results in its major exploration
activities. The Company made 5 oil and gas discoveries offshore China,
including 4 independent discoveries, namely Bozhong 34-1 (block 4),
15
Bozhong 34-1 (block 5), Jinzhou 21-1S and Huizhou 26-3. Our partner Kerr-McGee
made a discovery at Caofeidian 14-5. In Indonesia, the Company obtained 1 oil
and gas discovery, KE7-3.
During the reporting period, the Company acquired 32,265 kilometers of 2D
seismic data offshore China, all of which were acquired independently. We also
acquired 4,530 square kilometers of 3D seismic data, including 4,140 square
kilometers acquired independently, and 390 square kilometers acquired by PSC
partners. The Company completed 60 exploration wells in 2004. 52 were drilled
offshore China, in which 36 were independent wells, whilst 16 were PSC wells.
In offshore China, the Company successfully appraised 14 hydrocarbon-bearing
structures, 11 were independent appraisals, including Jinzhou 25-1S, Luda
27-2, Luda 32-2, Bozhong 34-1 (block 3), Bozhong 34-1 (block 4), Qinhuangdao
33-1, Jinzhou 9-3E, Weizhou 12-1, Weizhou 11-1N, Liuhua 19-5, Panyu 34-1.
There were 3 PSC appraisals, including Penglai 14-3, Weizhou 12-8, and
Canxue-4.
Bohai Bay
Bohai Bay is the Company's most important oil and gas production base offshore
China.Its contribution of oil and gas production and reserves to the Company
ranked the top in the past years. As at 31 December 2004, the Company has net
proved reserves of 1,092 million BOE in the Bohai bay area, accounting for 49%
of the Company's total. In 2004, the average daily production in the area
amounted to 142,469 BOE, accounting for 37% of the Company's total. The
Company has exploration licenses of 15 blocks in the region and our partners
have 8 PSC blocks.
In 2004, there were altogether four new oil and gas projects that commenced
production in Bohai Bay, namely Qikou 18-2, Caofeidian 11-1/11-2, Bozhong
25-1/25-1S, and Bonan oil and gas field. The importance of the area as the
Company's core area was further protruded.
In 2004, the Company sustained a strong momentum in oil and gas exploration in
this region. Seismic and drilling activities were increased, and encouraging
exploration results obtained. The Company made four oil and gas discoveries in
Bohai Bay in the year, including Bozhong 34-1 (Block 4), Bozhong 34-1 (block
5), Jinzhou 21-1S and Caofeidian 14-5, and successfully appraised eight
hydrocarbon-bearing structures, including Jinzhou 25-1S, Luda 27-2, Luda 32-2,
Bozhong 34-1 (block 3), Bozhong 34-1 (block 4), Qinhuangdao 33-1, Jinzhou
9-3E, and Penglai 14-3. Therefore, these results laid solid basis for future
production growth in this area.
In 2004, 27 wells were drilled in Bohai Bay and 2,154 square kilometers of 3D
seismic data were acquired. Of these, 19 (including 8 wildcat wells and 11
appraisal wells) were drilled independently. 8 wells were drilled by PSC
partners, including 7 wildcat wells, 1 appraisal well, and 390 square
kilometers of 3D seismic data were acquired.
In Bonan block, the Company drilled 3 wildcat wells, 2 appraisal wells, and
made 2 oil and gas discoveries, namely Bozhong 34-1 (block 4) and Bozhong 34-1
(block 5), and successfully made appraisals in Bozhong 34-1 (block 3) and
Bozhong 34-1 (block 4).
In Liaodong Bay block, the Company drilled 5 wildcat wells, 7 appraisal wells,
made a new oil and gas discovery in Jinzhou 21-1S, and successfully made
appraisals to 3 hydrocarbon-bearing structures, including Jinzhou 25-1S, Luda
27-2 and Jinzhou 9-3E.
The Company drilled an appraisal well in Bozhong block, and successfully
appraised the structure of Qinhuangdao 33-1. The Company also successfully
appraised Luda 32-2 in block 06/17.
In 2004, our partner ConocoPhillips successfully drilled an appraisal well on
Penglai 14-3 structure in block 11/05.
Another partner, Kerr-McGee conducted drillings in block 04/36, 09/06 and
09/18, and successfully made an oil and gas discovery in Caofeidian 14-5 in
block 09/06.
In other PSC blocks, our partners also conducted exploration drillings and
seismic acquisitions.
Western South China Sea
Production of natural gas has always been the highlight in this area. The
Company's two large natural gas fields, Yacheng 13-1 and Dongfang 1-1, are
located in this area.
16
As at the end of 2004, the Company has a total of 604 million BOE of net
proved reserves in the Western South China Sea, accounting for 27% of the
Company's total net proved reserves. The Company's average daily net
production in the area amounted to 94,137 BOE, or 25% of the Company's total.
During the reporting period, the Company had 34 exploration licenses in the
Western South China Sea and our partner had 8 blocks.
2004 was the first year after the Company successfully assumed operatorship of
Yacheng 13-1. The smooth operation of the gas field made the Company more
confident to operate independently.
In 2004, the Company drilled 12 wells in this area, which included 5 wildcat
wells and 3 appraisal wells independently, and acquired 13,827 kilometers of
2D seismic data and 1,047 square kilometers of 3D seismic data. Our partner
drilled 2 wildcat wells and 2 appraisal wells, and 3 hydrocarbon-bearing
structures were successfully appraised during the year.
The Company drilled 3 appraisal wells in Yulin block 35 of Beibu Gulf, and
successfully appraised 2 hydrocarbon-bearing structures, namely Weizhou 11-1N
and Weizhou 12-1. Roc Oil (China) Company drilled a wildcat and 2 appraisals
in the 22/12 block of Beibu Gulf, and successfully appraised the
hydrocarbon-bearing structure of Weizhou 12-8. During the year, the Company
announced the successful commencement of Weizhou 12-1N in this area.
In addition, the Company drilled a number of wildcat wells and acquired
seismic data in Zhu III Sag, Qiongdongnan basin and Yinggehai basin.
Eastern South China Sea
Crude oil production has always been an important business in the Eastern
South China Sea. In recent years, the Company was delighted to discover that
the natural gas business in this area has been developing rapidly.
After we made a breakthrough in Baiyun Trough in the Pearl River Mouth basin
in 2003, the Company again successfully appraised 2 hydrocarbon-bearing
structures in this area, namely Liuhua 19-5 and Panyu 34-1 in 2004. The
potential for natural gas exploration in this area has provided a solid
foundation for the natural gas market in Pearl River Delta. At the same time,
it increased the exploration potential in the adjacent deep water areas,
indicating the hydrocarbon generating conditions and good exploration
prospects in the deep water areas of the Eastern South China Sea.
The Company's net proved reserves in the Eastern South China Sea amounted to
290 million BOE, accounting for approximately 13% of the Company's total net
proved reserves. The average daily net production in the Eastern South China
Sea was 96,989 BOE, or 25% of the Company's total.
The Company had exploration licenses in 38 blocks in this area, while our
partner had 7 blocks.
In 2004, the Company drilled 8 wells in this area, of which 3 wildcat wells
and 3 appraisal wells were independent wells, and acquired 6,560 kilometers of
2D seismic data, 1,329 square kilometers of 3D seismic data. Meanwhile our PSC
partner drilled 2 wildcat wells.
During the period, the Company made a new discovery (Huizhou 26-3) in this
area, and successfully appraised 2 structures, namely Liuhua 19-5 and Panyu
34-1.
In 2004, the Company also drilled 1 wildcat well independently in Xijiang 04
block, and our partner Devon drilled 2 wildcat wells in block 15/34 .
During the reporting period, CNOOC entered into a petroleum contract with
Husky Oil China Limited with respect to the deep water block 29/26 in Pearl
River Mouth Basin in the Eastern South China Sea. Under the terms of the
contract, we may back into up to 51% of any commercial discoveries at no cost
in the block.
East China Sea
At the end of 2004, the Company had net proved reserves of 89 million BOE in
the East China Sea, accounting for approximately 4% of the Company's total net
proved reserves. The average daily net production in the East China Sea was
4,963 BOE, or 1% of the Company's total.
The Company had exploration licenses in 47 blocks in this area, while our
partner had 3 contract blocks.
17
In 2004, the Company drilled 3 wildcat wells independently and 1 wildcat well
cooperatively in this area, 1 appraisal well, and successfully appraised
structure of Canxue in this area. The Company acquired 4,058 kilometers of 2D
seismic data in the Southern Yellow Sea areas.
The Company conducts joint exploration in Xihu Trough of the East China Sea
with Sinopec.
During the reporting period, there were some changes to our partners in the
Xihu project in this area. As no agreement could be reached with respect to
the development plan, Pecten Orient Company LLC. and Unocal East China Sea
Ltd. elected not to participate in the next development stage. This did not
affect the normal operations of the Xihu project, and the Company is still
confident about the prospects of the project.
Overseas
As at 31 December 2004, the Company had net proved reserves of 155 million BOE
in Indonesia, accounting for 7% of the Company's total net proved reserves.
The Company's average daily production in the area was 43,955 BOE, or 11% of
our total production.
During the period, the Company and our partner KODECO made a new discovery
KE7-3 in the West Madura PSC area in the East Java Sea of Indonesia.
In 2004, the Company increased its equity interest in the Tangguh LNG Project
in Indonesia to 16.96%.
Table of major exploration blocks
Blocks Block Partner Exploration
Area License
(km(2) (Commencement-
Expiration)
Middle of Bohai Bay 4,974 26.4.04526.4.06
Southern Bohai Bay 3,679 6.8.0458.6.06
Western Bohai Bay 1,895 8.6.0458.6.06
Western Liaodong Bay 3,344 31.3.0058.4.06
Eastern Liaodong Bay 2,829 2.7.0152.7.06
Eastern Bozhong 1,861 30.5.04530.5.06
Bohai Block 09/11 843 5.4.0455.4.06
Bohai Block 06/17 2,586 20.2.03520.2.05
Bohai Block 02/31 4,990 29.5.03529.5.05
Independent Total 27,000
Bohai Block 11/19 3,068 ChevronTexaco 29.5.04529.5.05
Bohai Block 05/36 2,766 Kerr-McGee/Newfield 10.2.04510.2.06
/Sino-American Energy
Eastern Bohai Block 11/05 3,601 Conocophillips 16.8.04516.8.06
Western Bohai Block 11/05 2,897 Conocophillips 10.2.04510.2.06
Bohai Block 09/18 2,218 Kerr-McGeee 4.4.0454.4.06
Bohai Block 04/36 1,694 Kerr-McGee/Sino-American Energy 1.1.0451.1.06
PSC Total 16,244
Bohai Total 43,244
North Yellow Sea 6,471 25.5.01525.5.06
Northern Trough (Northen South 912 30.8.00530.8.05
Yellow Sea)
Xihu Hangzhou 26 (East China Sea) 3,642 31.3.03531.3.05
Xihu Hangzhou 17 (East China Sea) 4,227 28.8.01528.8.08
Xihu Huangyan 04 (East China Sea) 2,848 28.8.01528.8.08
Xihu Zhenhai 01 (East China Sea) 1,536 28.8.01528.8.08
Lishui -Jiaojiang Trough (East 6,767 31.3.00528.11.05
China
18
Blocks Block Partner Exploration
Area License
(km(2) (Commencement-
Expiration)
Sea)
Kunshan Block 02 (East China Sea) 2,628 11.5.01511.5.06
Jinhua Block 12 (East China Sea) 6,931 11.5.01511.5.06
Tiantai 32 (East China Sea) 5,400 17.7.01517.7.06
Fuzhou Block 02 (East China Sea) 3,064 11.5.01511.5.06
Taibei Block 27 (East China Sea) 7,379 9.7.0159.7.06
Taoyuan 07 (East China Sea) 6,457 9.7.0159.7.06
Jilong 25 (East China Sea) 5,692 9.7.0159.7.06
Independent Total 63,952
Block 32/32 (East China Sea) 513 PrimeLine - Petroleum 11.7.02511.7.04
PSC Total 513
East China Sea Total 45,681
Xijiang 04 (Pearl River Mouth 7,969 11.5.01511.5.06
Basin)
Lufeng 06 (Pearl River Mouth 4,457 11.5.01511.5.06
Basin)
Huizhou 31 (Pearl River Mouth 3,074 11.5.01511.5.06
Basin)
Enping 15 (Pearl River Mouth 5,833 11.5.01511.5.06
Basin)
Enping 10 (Pearl River Mouth 6,547 11.5.01511.5.06
Basin)
Panyu 33 (Pearl River Mouth Basin) 4,830 11.5.01511.5.06
Liuhua 07 (Pearl River Mouth 4,172 11.5.01511.5.06
Basin)
Dongsha 04 (Pearl River Mouth 5,295 11.5.01511.5.06
Basin)
Kaiping 14 (Pearl River Mouth 7,753 11.5.01511.5.06
Basin)
Kaiping 32 (Pearl River Mouth 8,104 11.5.01511.5.06
Basin)
Dongsha 32 (Pearl River Mouth 7,350 5.11.0355.11.10
Basin)
Independent Total 65,381
Block 15/34 (Pearl River Mouth 4,984 Devon/Burlington 24.12.03524.12.05
Basin)
PSC Total 4,984
Eastern South China Sea Total 70,365
Weizhou 12 (Beibu Gulf) 6,980 11.5.01511.5.06
Yulin 35 (Beibu Gulf) 6,050 11.5.01511.5.06
Weizhou 26 (Beibu Gulf) 4,358 5.11.03511.5.06
Ledong 01 (Yinggehai) 6,543 3.12.0353.12.05
Lingtou 20 (Yinggehai) 2,684 30.8.00530.8.05
Lingao 11 (Yinggehai) 4,117 11.5.01511.5.06
Sonttao 22 (Qiongdongnan) 4,063 11.5.01511.5.06
Sonttao 31 (Qiongdongnan) 5,264 11.5.01511.5.06
Lingsui 18 (Qiongdongnan) 7,738 6.8.0256.8.07
Yangjiang 31 (Pearl River Mouth 6,003 3.12.0353.12.05
Basin)
Qionghai 28 (Pearl River Mouth 5,208 11.5.01511.5.06
Basin)
Wenchang 11 (Pearl River Mouth 4,901 11.5.01511.5.06
Basin)
Independent Total 63,907
North Wanan-21 A 6,801 Benton Offshore China Company 30.9.03530.9.05
North Wanan-21 B 6,118 Benton Offshore China Company 30.9.03530.9.05
North Wanan-21 C 6,372 Benton Offshore China Company 30.9.03530.9.05
North Wanan-21 D 6,126 Benton Offshore China Company 30.9.03530.9.05
PSC Total 25,417
Western South China Sea 89,325
19
Total 267,399
As at December 31, 2004
The following is a summary of the main terms of production sharing contracts
commonly entered into by the Group, which has been extracted from the 2004
annual report of the Company.
PRODUCTION SHARING CONTRACTS
PRC
For production sharing contracts in the PRC, the foreign parties to the
contracts ("foreign partners") are normally required to bear all exploration
costs during the exploration period and such exploration costs can be
recovered according to the production sharing formula after commercial
discoveries are made and production begins.
After the initial exploration stage, the development and operating costs are
funded by the Group and the foreign partners according to their respective
participating interest.
In general, the Group has the option to take a up to 51% participating
interest in a production sharing contract and may exercise such option after
the foreign partners have independently undertaken all the exploration risks
and costs and made viable commercial discoveries.
After the Group exercises its option to take a participating interest in a
production sharing contract, the Group accounts for the oil and gas properties
using the "proportional method" under which the Group recognises its share of
development costs, revenues and expenses from such operations based on its
participating interest in the production sharing contract. The Group does not
account for either the exploration costs incurred by its foreign partners or
the foreign partners' share of development costs and revenues and expenses
from such operations.
Part of the Group's annual gross production of oil and gas in the PRC is
distributed to the PRC government as settlement of royalties which are payable
pursuant to a sliding scale. The Group and the foreign partners also pay a
production tax to the tax bureau at a pre-determined rate. In addition, there
is a pre-agreed portion of oil and gas designated to recover all exploration
costs, development costs, operating costs incurred and related interest
according to the participating interests between the Group and the foreign
partners. Any remaining oil after the foregoing priority allocations is first
distributed to the PRC government as government share oil on a pre-determined
ratio pursuant to a sliding scale, and then distributed to the Group and the
foreign partners based on their respective participating interests. As the
government share is not included in the Group's interest in the annual
production, the net sales of the Group do not include the sales revenue of the
government share oil.
The foreign partners have the right either to take possession of their
allocable remainder oil for sale in the international market, or to negotiate
with the Group to sell their allocable remainder oil to the Group for resale
in the PRC market.
Overseas
The Group and the other partners to the production sharing contracts in
Indonesia are required to bear all exploration, development and operating
costs according to their respective participating interests. Exploration,
development and operating costs which qualify for recovery can be recovered
according to the production sharing formula after commercial discoveries are
made and production begins.
The Group's net interest in the production sharing contracts in Indonesia
consists of its participating interest in the properties covered under the
relevant production sharing contracts, less oil and gas distributed to the
Indonesian government and the domestic market obligation.
20
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report on Form 6-K to be signed
on its behalf by the undersigned, thereunto duly authorized.
CNOOC Limited
By: /s/ Cao Yunshi
-------------------------
Name: Cao Yunshi
Title: Company Secretary
Dated: February 20, 2006