Canada's Husky signs sales agreement for Liwan 3-1 Gasfield
Shanghai. August 1. INTERFAX-CHINA - Husky Energy Inc. (Husky), one of Canada's largest energy companies, has signed an agreement for the sale of gas derived from the Liwan 3-1 Gasfield that it shares with China National Offshore Oil Corp. (CNOOC), Husky announced July 27.
Gas extracted from the field will be supplied to Guangdong Province via Guangdong Natural Gas Grid Co. Ltd., a gas distributor, once production begins in 2013 or 2014, according to the announcement.
Toronto Stock Exchange-listed Husky expects to recoup its investment in the offshore Liwan 3-1 Gasfield in four to five years on the basis that Guangdong Natural Gas purchases supplies at $11 to $13 per cubic foot.
Located 300 kilometers (km) southeast of Hong Kong in the South China Sea, the gasfield is part of Block 29/26. The block spans 3,965 square km and is estimated to have up to six trillion cubic feet of unproven natural gas reserves.
Husky signed a production sharing contract (PSC) with CNOOC in 2004 to develop the block. Husky has invested an aggregate $3 billion in three gas fields in the block - Liwan 3-1, Liuhua 34-2 and Liuhua 29-1 - and operates all three projects, while CNOOC retains a 51 percent working interest.
Daily production from the Liwan 3-1 and the Liuhua 34-2 gasfields will likely total 300 million cubic feet once operational.
Husky has allocated a capital expenditure of $500 million for offshore projects in China and Indonesia.
-HD