Narrative
Full Description
Project narrative
In 2006, CNPC (Hong Kong) Limited and its subsidiaries acquired a 70% equity stake in a special purpose vehicle known as Continental-GeoPetro (Bengara-II) Limited, which had interests in the oil and gas properties of Bengara II Production Contract Area in East Kalimantan, Indonesia. According to the equity transfer agreement, CNPC (Hong Kong) Limited injected $18,700,000 (approximately HK$144,832,000) into Continental-GeoPetro (Bengara-II) Limited as a shareholder loan for the exploration expenses required. CNPC (Hong Kong) Limited and its subsidiaries planned to complete the drilling work of four exploration wells during the exploration period (ending in December 2007) so as to confirm the oil reserves and apply for development. After the official take-over of Continental-GeoPetro (Bengara-II) Limited in October 2006, CNPC (Hong Kong) Limited and its subsidiaries immediately arranged the drilling and exploration works. In 2007, four exploration wells were drilled, although there was indication of different level of oil trail, commercial discovery was not confirmed. The petroleum contract has a term of thirty years, but the exploration phase only covered ten years which ended on December 4, 2007. After the drilling of the four exploration wells, the exploration phase expired before the comprehensive exploration works commenced, and all testing activities were subsequently suspended. CNPC (Hong Kong) Limited and its subsidiaries applied in writing to the Petroleum Department of Indonesia (BP Migas) to extend the term for exploration so as to finish the remaining exploration works and arrive at a conclusion. After relentless explanations to the Petroleum Department of Indonesia by the management of Continental-GeoPetro (Bengara-II) Limited, eventually in February 2009, the Petroleum Department agreed to extend the exploration phase to December 2011. All related exploration expenses incurred by CNPC (Hong Kong) Limited and its subsidiaries were written off in 2007.