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RH Petrogas obtains government nod to drill Fuyu 1 Block onshore China

16th October 2014

Singapore-based RH Petrogas Limited (RHP) has received approval from the National Development and Reform Commission (NDRC) of the People’s Republic of China for its Overall Development Plan (ODP) for the phased development of the Yongping Oilfield in the Fuyu 1 Block

RH Petrogas obtains government nod to drill Fuyu 1 Block onshore China
Fuyu 1 Block is expected to yield a total of 14.6 million barrels of oil during its production cycle, of which RHP will hold a 49 per cent interest

The approval of the ODP will allow the company to advance into the development and production phase for Fuyu 1 Block.

“We are very excited to receive the NDRC approval,” said Francis Chang, RHP chief executive officer.

“It represents a significant milestone for our China project as it moves into the development and production phase. In anticipation of this approval, we had started pre-development preparation as well as the procurement of long lead items since early 2013. This helps to accelerate the development programme and allow production to commence in early 2015. Production will be ramped up progressively as more wells are drilled under the approved ODP.”

Fuyu 1 Block is located in Songliao Basin, Jilin Province, the People’s Republic of China and is operated by Kingworld Resources Limited (KRL), a wholly owned subsidiary of RHP.

KRL entered into the petroleum contract for Fuyu 1 Block (Fuyu 1 PSC) with China National Petroleum Corporation (CNPC) in November 2007.

KRL has a 100 per cent working interest in the Fuyu 1 Block during the evaluation phase. Upon the commencement of commercial production under the Fuyu 1 PSC, CNPC would back in for a 51 per cent working interest.

The approved ODP allows KRL to operate and drill up to 1,008 wells in Fuyu 1 Block over the course of five years. These are shallow wells with average depth of less than 300 metres.

Fuyu 1 Block is expected to yield a total of 14.6 million barrels of oil during its production cycle, of which RHP will hold a 49 per cent interest.

The Fuyu 1 Block was explored by CNPC in 1984. After the discovery of oil, the Fuyu 1 Block was not developed due to the nature of heavy oil, multiple thin reservoir sand layers, low oil saturation and the oilfield being compartmentalised by shale barriers and faults.

However, with advancements in technology, high oil prices, the relatively low cost of developing the shallow oil reservoir and the low cost of oil production in the PRC, the development and production of oil at the Fuyu 1 Block has potentially become more commercially viable, as compared to about 20 years ago.

 

 

 

 

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