CANADA’S Husky Energy will drill two wells in the Pearl River Mouth basin in 2017 after signing a production sharing contract (PSC) with China National Offshore Oil Corporation (CNOOC).

Located about 140 kilometres southeast of Hong Kong, block 15/33 covers 15,500 hectares in the South China Sea in water depths of between 80 metres and 100 metres.

Allocated by CNOOC for foreign cooperation in 2014, the block will be wholly operated by Husky during the exploration phase.

Should a commercial discovery be made, CNOOC China may assume a working interest of up to 51 per cent during the development and production phase.

Exploration cost recovery from production would be allocated to Husky.

Husky already holds a variety of projects in China, including a 49% stake in the Liwan Gas Project PSC, held with CNOOC, and a 40% stake in the Wenchang oilfield, located in the Pearl River Mouth basin about 400 kilometres southwest of Hong Kong.