(June 7, 2006) - CNOOC Limited announced today that its parent company, China National Offshore Oil Corporation (CNOOC) has inked two production sharing contracts (PSC) with BG Group (BG) for deepwater blocks 64/11 and 53/16 in the Western South China Sea. In the meantime, a Geophysical Survey Agreement (GSA) on block 41/06 in the Eastern South China Sea has been signed between the two parties.

Both of the PSC blocks are located in the Qiong Dong Nan basin, and block 41/06 is in the Pearl River Mouth Basin. These three blocks are on the list of 12 blocks CNOOC offered for cooperation in 2002, covering a total area of approximately 25,800 square ilometers in water depth ranging form 180 to 2100 meters.

This is the first step for CNOOC and BG to cooperate in offshore China. Previously, four deepwater contracts have already been signed between CNOOC and its foreign partners.

Under the terms of the contracts, BG will conduct 2D and 3D seismic in Block 64/11 and 53/16, and drill 1 exploration well during the first phase of the exploration period on each block. BG will retain 100 percent interests during the exploration phase and the Company has the right to participate up to 51% working interest in any commercial discoveries in the blocks.

According to the GSA on Block 41/06, BG is committed to acquire 2D seismic data and conduct processing and interpretation of current data.

Mr. Fu Chengyu, Chairman and CEO of the Company said, We welcome BG’s decision to join us in exploring the deep water potential offshore China. I expect a successful partnership, which would bring value to both companies.