CNOOC of China and CPC of Taiwan have entered into a petroleum contract covering the contract area of Tainan Basin and Chaoshan Trough. The contract is subject to approvals by respective authorities. CNOOC Limited owns all commercial rights and interests under the contract. CNOOC and OPIC, a CPC wholly owned investment subsidiary, signed a geophysical study agreement on the area in 1996. The agreement was executed from 1998 to 2000 and lead to the identification of seven potential oil and gas formations. Experts from both parties agreed on the potential of the area and decided to enter into exploration stage. "This is an important milestone of commercial cooperation between oil and gas companies from across the Strait. The commitment of joint exploration moves the two companies to a new stage of cooperation," commented Mr. Wei Liucheng, Chairman and CEO of the Company, "Based on the principle of mutual benefits, this contract will bring win-win results to both parties." Located in Pearl River Mouth in the South China Sea, the contract area covers 15,400 square kilometers. Under the contract, each party is responsible for funding half of the expenditures and enjoys equal commercial interests and rights. Two companies will form a joint management committee to oversee the execution of the contract. The work program includes reprocessing 500 kilometers of seismic data, acquiring an additional 4,000 kilometers of 2D seismic and drilling three exploration wells. The estimated expenditure is US $25 million. CPC is one of the largest companies in Taiwan and engages in oil and gas exploration, development, refinery, transportation, storage and sales, as well as the production and supply of petrochemical raw materials. The cooperation between CNOOC and CPC complements each other on technology, management and capital and is expected to bring both parties mutual benefits.