ROC

[Wargfang]

My reading is this CNOOC is the Chinese governement ensuring oil found in their waters is under their control, it is part of the tenement deal and they will come in for 51% of the development and of course the subsequent profit.

 

So the exploration risk is born by private enterprise but the permission to explore is on the basis its a 50/50 deal with the governmenmt.

 

(CNOOC is a state-owned oil company, 70% of whose shares are owned by the Government of the People's Republic of China).

 

Seems prudent to me.

 

On an aside, theres no captial gains tax in China yet for share trades !!

[annaliese]

A bit more on CNOOC terms from Petsec, 2002

 

" In the event of a commercial discovery the China National Offshore Oil Company (CNOOC) has the right to back in for up to 51% working interest to be acquired from all participants on a pro rata basis.

 

The Petroleum Contract relating to Block 22/12 requires CNOOC to pay its share of development costs and offers very good terms for cost recovery to the joint venturers."

[King Baz]

thanks anna, something like US$10M could be recouped l recall between the partners, take this with a grain of salt, just from the top of my head.

[mangrove]

In reply to: annaliese on Thursday 11/05/06 10:28am

Thanks Guys,

 

Still not answered though.the right to back in for up to 51% working interest to be acquired from all participants on a pro rata basis

 

There is no suggestion that CNOOC pay, is there?

 

Cheers........M

 

 

[King Baz]

magrove, CNOOC have to pay! I am certain.

 

extract from anna's post;

 

QUOTE

offers very good terms for cost recovery to the joint venturers

[mangrove]

In reply to: King Baz on Thursday 11/05/06 10:34am

Hi KB,

 

So are you saying that acquired in this context means "pay for" rather than "muscle in for free".

 

It would be helpful for the partners to get back 51% of their outlays. It would be more helpful for them to get back 51% of the commercial value they have produced.

 

Cheers.............M.

[Wargfang]

They pay nothing to get in but will then be involved in incuring 51% of development and production costs. They have huge infrastructure in China (3rd biggest oiler...their Santos as such) and thus offer the ability to ensure a competitve margin on production and delivery costs.

[Commander C]

In reply to: Wargfang on Thursday 11/05/06 10:45am

Do you know if the jv will have to give up the exploration acreage outside any "production license" area?

[annaliese]

In reply to: mangrove on Thursday 11/05/06 01:43pm

Mangrove, CNOOC pay development costs up to the percentage they back in, ie if they back in 51% they pay 51% of the development costs.

 

....." requires CNOOC to pay its share of development costs and offers very good terms for cost recovery to the joint venturers."

[annaliese]

In reply to: Commander C on Thursday 11/05/06 02:06pm

Can't see why CC. The jv has fulfilled its work obligations. They can voluntarily walk away or let it lapse on expiry but in the present circumstances I can't see either happening.