Husky Energy's Recent Gas Discovery in the South China Sea

Husky Energy's Recent Gas Discovery
Spurs More Exploration Activity

In June, Husky Energy announced a deep gas discovery beneath the South China Sea, about 155 miles south of Hong Kong. The area had been abandoned decades earlier when shallower wells had come up dry.

Fu Chengyu, Chairman of Husky's Chinese partner China National Offshore Oil Corp (CNOOC) called the gas discovery "a tremendous breakthrough for us." The find may reportedly contain 3.5 trillion cubic feet of gas. Last week, Husky Energy and CNOOC signed three new production-sharing contracts to drill for oil and gas in deepwater blocks in the eastern and western South China Sea.

While Husky Energy may be Calgary-based, it remains controlled by Hong Kong billionaire Li Ka-shing. China's big announcement in mid July invited the more autonomous foreign oil companies to explore in as many as nine blocks in northwestern China.

The target is the Xinjian's Tarim Basin, which has proven reserves of six billion tons of oil and eight trillion cubic meters of natural gas. Analysts heralded this as China's biggest step forward in cooperating with major foreign oil and gas companies since 1994.

China is eager to move these projects further in order to keep its 2200-mile natural gas pipeline running at capacity to supply its major coastal cities in eastern China.


James Finch contributes to StockInterview and other publications. Visit http://www.stockinterview.com to read all of his archived articles.