Unocal Corporation and the Royal Dutch/Shell Group said yesterday that they have elected not to proceed with their participation in five contracts to explore for, develop, and market natural gas resources in the Xihu Trough of the East China Sea.
Unocal East China Sea, a Unocal subsidiary, and Pecten Orient Company, a subsidiary of the Royal Dutch/Shell Group, each hold a 20-percent working interest in the contracts.
Other participants are China National Offshore Oil Corporation (CNOOC) with 30 percent working interest; and China Petrochemical Corporation (Sinopec), which also holds 30 percent.
The Unocal and Shell affiliates entered into the Xihu Trough contracts in August 2003. The contracts required a final investment decision to be made after a 12 month period of appraisal and analysis.
Unocal expects to record a charge of approximately $10 million after-tax in the third quarter 2004 for relinquishment of lands and settlement of remaining obligations.