Sinopec and CNOOC are close to completing an agreement with Shell and Unocal to explore for gas in the East China Sea. The two Chinese oil majors were expected to hold 30 percent stake each in the deal and the two foreign companies would take 20 percent each. "We will reach consensus in the short term," according to one official close to the deal.
Sinopec and CNOOC, which each now won 50 percent stakes in the project, said in March they had started preparations for commercial production in the Xihu Trough of the East China Sea. Natural gas would be piped ashore from Xihu by 2004 to supply the booming province of Zhejiang and financial city of Shanghai. The annual production capacity of the Xihu Trough should be 800 million cubic meters by 2004 and increase to 1.2 billion cubic meters by 2006. The Xihu Trough, 250 miles off Shanghai, has proven gas reserves of 80 billion cubic meters.