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CNOOC to develop Iranian gas field

By Wang Yu (China Daily)
Updated: 2006-12-22 09:48

"We have been in close contact for a while. But it is premature to release the results of any negotiations at the present time," spokesman Liu Junshan told China Daily.

An industry insider told China Daily that under the terms of a planned agreement signed as early as October, the National Iranian Oil Company offered CNOOC a 25-year gas supply from the North Pars field.

Lee Meileng, chief analyst of Platts' Beijing office, said the reported deal will be a shot in the arm for both CNOOC and China as a whole from business and energy supply perspectives. Platts is the world's largest provider of energy information and market research.

"By participating in and having ownership of overseas energy projects, Chinese oil companies can better safeguard energy safety for China as a major energy consumer. They themselves can also benefit from this kind of participation by taking advantage of hefty global energy prices," said Lee.

The Platts analyst explained that CNOOC's share of gas from the reported joint programme in Iran could either meet robust demand from liquefied natural gas (LNG) terminals built by CNOOC in the coastal areas of China, or be sold on the global market.

"Either will be positive for CNOOC and China. Therefore, I see this move as good from both a business and energy supply perspective," said Lee.

Agreeing with Lee, Zhou Dadi, former director of the National Development and Reform Commission's Energy Research Institute, commented that compared with simply importing oil or gas from abroad, investing and getting involved in overseas projects was more cost-effective and a safer way of ensuring consistent energy supplies.

CNOOC, as China's largest offshore oil supplier, plans to build as many as seven LNG-importing terminals in six provinces and municipalities.

By the end of October, only two of them had obtained government approval.

"Only with a secure and consistent gas supply, can LNG terminal construction be meaningful and gain approval," said Lee.