The first oil should be pumped from the Bohai Bay off the coast of northeast China in the third quarter this year, a quarter ahead of schedule, according to Kerr-McGee Corp. (KMG).

Production follows a decade of exploration and construction off the Chinese coast.

KMG is one of the world's biggest independent oil and gas exploration companies.

David Hager, the company's senior vice president for worldwide oil and natural gas exploration and production, said the company's production from the Bohai Sea is to begin in the CFD-11 and CFD-12 fields in one of the company's four licensed blocks. Those two fields are believed to hold 150 million barrels of oil equivalent.

KMG is using a made-in-China, 370-meter floating production storage and offloading vessel, instead of an oil platform, to tap the well.

The second phase of development will begin in 2006.

"The Bohai Bay development continues to move along ahead of schedule," Hager said, “We are very pleased with the progress we have made in China this year.”

KMG won the exploration rights in Block 04/36 of Bohai Bay in 1994 and discovered the oilfields in 1999.

As the operator, KMG has a 40.1 percent interest in the fields, with China National Offshore Oil Corp. (CNOOC) holding 51.0 percent and Ultra Petroleum Corp. of the US taking 8.9 percent.

Hager also said the company is planning with CNOOC to develop other discoveries made last year in the area.

"We believe that the China offshore basins provide significant potential as proven petroleum basins," he said, "Kerr-McGee hopes to take advantage of the infrastructure growth in these basins that will be built to support the huge energy demand in China as the country's economy grows."  

(China Daily May 31, 2004)