CNOOC and Shell Sign Production Sharing Contract for Bohai Bay

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January 14, 2002

CNOOC Limited (NYSE: CEO, SEHK: 883, the "Company") announced today that its parent, China National Offshore Oil Corporation ("CNOOC") and Shell Exploration China Limited ("Shell") signed a Production Sharing Contract (PSC) for the exploration of the Bonan area of Bohai Bay.

Shell will be the operator under the contract, which involves a minimum of two wildcat wells in the first two years, with options for two further wildcat wells in the following four years.

The contract includes rights for Shell to participate with CNOOC in development if oil or gas is found in commercial quantities.

The 3,190 square kilometers Block 11/26 is of one of four areas in Bohai Bay identified for joint activities under a Strategic Alliance signed between CNOOC and Shell on November 13, 2000. The block is in 25 meters of water in the southern part of Bohai Bay, about 30 kilometers north west of Longkou.
Shell is planning to complete a three-dimensional (3D) seismic survey over the area during 2002, and will drill two exploration wells in 2003.

Mr. Ru Ke, Executive Vice President of the Company said: "The signing of this contract shows our partner′s confidence in the potential of prolific Bohai Bay area. The Company welcomes our partners′ exploration interests in offshore China and will maintain an exploration strategy of adding reserves through independent exploration and PSC activities. "

Martin Bradshaw, Managing Director of Shell Exploration China Limited, said: "This is a significant milestone in the development of our Strategic Alliance Projects and demonstrates the close cooperation between our companies.

"For Shell it is also our first contract in one of China′s most important oil producing areas, and particularly exciting because of the prospects for gas. Both CNOOC and Shell are committed to developing China′s gas reserves, which are important for the nation′s sustainable development."


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