Cessation looms for LufengNews // February 28, 2003
Plans call for production to cease next February after six years on stream. Today's daily output of roughly 6,500 barrels is expected to decline to 4,500 in 2004.
"Continued operation is unlikely to be economic at that level of production," says Inge Kj°de, head of Statoil Orient in China.
Plans to abandon the field must be approved by the CNOOC and the Chinese authorities, and Mr Kj°de reports that this work could create a precedent, because Lufeng will be the first oil development off China to cease production.
Among other steps, the licensees are due to produce an environmental study as required by Chinese guidelines.
No decision has yet been taken on whether the physical shut-in will be completed as a single operation or in several phases.
Once the Munin production ship currently deployed on the field has been freed up, it can be readied for other assignments.
Lufeng is Statoil's only project in China, and Mr Kj°de accordingly expects the group to close down its operation there when the field has been abandoned.
The office in Shekou employs 21 Chinese staff together with seven personnel posted from the parent company. In addition, there is a crew of about 60 local employees on Munin.Lufeng came on stream in December 1997, and the production target of at least 20 million barrels of equity oil was reached after just four years.