Husky Energy Inc. says that its wholly owned subsidiary, Husky Oil China Ltd., has signed a Heads of Agreement with China National Offshore Oil Corporation (CNOOC), specifying the key principles of cooperation for funding and operation of the Liwan 3-1 deep water gas field development.

'The signing of this agreement formalizes the business arrangement between Husky and CNOOC for this important gas project. This contractual milestone complements the significant progress on the project to date with appraisal work and front-end engineering design complete,' said John C.S. Lau, President & Chief Executive Officer, Asia Pacific. 'The overall development plan submission to regulatory authorities is expected in early 2011.'

Husky currently has a Petroleum Contract in place with CNOOC for Block 29/26 which covers the fiscal framework for exploration and development of oil and gas. Under the agreement for Liwan 3-1 field development, Husky has agreed to operate the deep water portion of the project involving development drilling and completions, subsea equipment and controls, and subsea tie-backs to a shallow water platform. CNOOC Limited has agreed to operate the shallow water portion of the project including a shallow water platform, approximately 270 km subsea pipeline to shore, and the onshore gas processing plant.

Husky continues to hold 49% working interest for Liwan 3-1. First gas from the Liwan 3-1 development is anticipated in late 2013, ramping up through 2014.

In addition to Liwan 3-1, Husky has built a high-quality asset base in Asia Pacific, including further natural gas discoveries on block 29/26 at Liuhua 29-1 and, Liuhua 34-2, and the producing Wenchang oil field offshore China. The company's other growth opportunities include the Madura BD and MDA gas fields developments offshore Indonesia and the North Sumbawa II exploration block.

Tags: Husky Energy Inc.