Petsec Energy Ltd reports a critical milestone for the development of three Beibu Gulf, China, oil fields in which Petsec has an interest.

The milestone was achieved on 24th August, in Beijing with the signing by China National Offshore Oil Corporation Ltd (CNOOC) of the Supplemental Development Agreement (SDA) for the 6.12, 6.12 South and 12.8 West oil fields attaching to the Block 22/12 Petroleum Contract.

Signing of the agreement was announced today by the operator of the Block 22/12, Beibu Gulf, China, joint venture, Roc Oil Company Limited. The SDA confirms CNOOC's participation in the project for a 51% interest, acceptance of its operatorship of the development and production of the fields, and the terms of access to CNOOC's adjacent 12.1 oil field processing, pipeline, storage and sales facilities, which will be used to produce oil and gas from the 6.12, 6.12 South and 12.8 West fields.

The final crucial requirement prior to the commencement of development is CNOOC's approval of the Overall Development Plan ('ODP') and the Final Investment Decision ('FID') by the joint venture, anticipated early in the fourth quarter of this year, leading to first oil production in the second half of 2012.

The participants in the development of the 6.12, 6.12 South and 12.8 West oil fields are: CNOOC (operator): 51.00% Roc Oil (China) Company: 19.60% Horizon Oil (Beibu) Limited: 14.70% Petsec Energy Ltd: 12.25% Oil Australia Pty Ltd: 2.45%

The estimates of proved and probable (2P) reserves for the 6.12, 6.12 South and 12.8 West oil fields under the current ODP, net to Petsec Energy's now 12.25% interest, are expected to be in the range of 3.1 to 3.4 million barrels of oil (MMbbl) and up to 6.4 MMbbl on a 3P basis.

Petsec Energy also owns a 25% working interest in two other oil fields within Block 22/12, the 12.8 East and 12.3.1 oil fields, which are estimated to hold potentially recoverable oil reserves of 15 to 72 MMbbl gross. CNOOC is currently conducting feasibility studies on both of these fields.

Block 22/12 holds eight undrilled oil prospects estimated to hold 100 MMbbl gross potential. It is anticipated that up to four exploration wells would be drilled from the 6.12 South and 12.8 West platforms during the 6.12, 6.12 South and 12.8 West development, which would test oil reserve potential of about 40 MMbbl gross.

Tags: Petsec Energy Ltd