Sinopec plans first deepwater oil exploration
Tue Apr 3, 2007 11:51am
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More Business & Investing News... BEIJING, April 3 (Reuters) - Sinopec Corp. (0386.HK) plans its first deepwater exploration well off China's coast in 2008, and is considering to lease a drilling vessel from Canada's Husky Energy Inc. (HSE.TO), company officials said on Tuesday.
Sinopec, Asia's top refiner but new to deepsea oil and gas exploration, has a tight budget as most of its expenditure is geared towards boosting onshore exploration and production as well as expanding its massive refining business.
"We don't have a capex for the deepsea sector. The spending is based on well by well," Ge Weimin, deputy chief engineer of Sinopec's offshore business, told Reuters on the sidelines of an industry seminar.
The company was expected to sink its wildcat in block 3 or block 4 in the Qing Dong Nan basin in the western South China Sea, with a water depth of 1,500 metres (4,920 ft), following seismic works that showed promising reserve potentials, said another company official who declined to be named.
"We have been talking to Husky about the possibility of renting its vessel," the official added.
Husky made China's first deepwater discovery last year in block Liwan 3-1-1 in South China Sea.
The global deepwater sector faces tight supplies of drilling rigs as high oil prices spur activity from the Gulf of Mexico to Angola.
Sinopec has been slow in pushing for its offshore sector as its top management mostly comes from the onshore side and views deepwater drilling as too expensive and risky compared with onshore drilling.
An onshore exploration well costs roughly $4 million, whereas a deepwater wildcat easily burns $100 million, they said.
