Canadian company Husky Energy will drill an oil well at a water depth of 1,500 meters in the South China Sea at the end of April, reported sources with Husky on Tuesday.

The well is in block 29/26, one of the twelve deepwater blocks for which the China National Offshore Oil Corporation (CNOOC) invited public bidding in 2002. Covering an area of 3,965 sq km, the contract block has a water depth between 300 and 2,000 meters.

According to contract between Husky and CNOOC, the exploration will be divided into three phases. Husky will drill one well in each phase and all expenditures incurred during the exploration period will be borne by Husky. CNOOC will command up to a 51 percent interest in the event of any commercial discovery in the block.

The well may be the first real deepwater well in China, said a senior manager of Husky who refused to disclose his name.

Since the 1990's, with the maturing of deepwater exploration technology, many great oil reserves have been discovered in deepwater. In the current phase, water depth between 300 to 500 meters can be classed as deep water. "In this sense, all oil and gas fields in the Chinese sea area did not reach the standard," said the source.

According to him, drilling was delayed from last December due to a lack of a deep-water drilling vessel. "This time it will be done on time," he said.

As the charter for the deepwater drilling vessel of Husky was signed at the end of 2004, the daily fee was about 200,000 US dollars. Now, with soaring oil prices, the current rent charge has been doubled.

The drilling will be finished in 45 days. "We hope to find oil here. And if we do, more companies would come to the region," he said.

The South China Sea has become a hot spot for deepwater oil exploration in recent years and the new move of Husky has attracted much attention from its rivals around the world.

Zhou Shouwei, President of CNOOC Ltd., has previously said that as the largest offshore oil company in China, CNOOC has listed deepwater exploration as a major strategy in the next five years.

According to Zhou, some deepwater cooperation contracts in four blocks have been signed between CNOOC and foreign oil companies and more are expected in the future.

Held by Hutchison Whampoa Limited, Husky Energy is an integrated energy and energy-related company that ranks among Canada's largest petroleum companies.

(Xinhua News Agency March 15, 2006)