(Yicai) June 26 -- China National Offshore Oil Corporation has penned a contract with Kazakhstan’s oil major KazMunayGas to explore and produce oil and gas in the country’s Zhylyoi Subsoil Area, marking the Chinese state-owned energy giant’s first upstream oil and gas development project in Kazakhstan.

CNOOC’s wholly-owned subsidiary CNOOC Hong Kong Holding and Astana-based KazMunayGas will set up an equally-owned joint venture to manage exploration and extraction activities, Beijing-based CNOOC said on June 24. The first stage of the exploration is expected to last nine years.

The Zhylyoi Subsoil Area is located partly in Kazakhstan’s western Atyrau region and partly in the Kazakhstan section of the Caspian Sea, with an area of approximately 958 square kilometers. Preliminary assessments by KazMunayGas indicate the block could hold over 185 million tons of oil reserves.

CNOOC and KazMunayGas first teamed up in October 2023 when they signed a memorandum of understanding for oil and gas exploration. In August last year, they selected the Zhylyoi Subsoil Area as their first joint project which they have been developing ever since.

As China’s largest offshore oil and gas producer, CNOOC holds interests in energy projects in more than 20 countries. As of the end of last year, the company had proven reserves of 7.3 billion barrels of oil equivalent with an annual production of 726.8 million barrels of oil equivalent. Of that, overseas reserves and output accounted for 37 percent and 32 percent respectively, according to its annual report.

CNOOC will continue to be on the lookout for more large-to-medium-sized oil and gas fields this year to grow its reserves and output, the company said in its annual report. It will also focus on expanding its footprint in countries along the Atlantic coast and the Belt and Road initiative.

Editor: Kim Taylor