TNAG-0947-FCO40-1166-Oil-developments-in-and-around-Hong-Kong-1980 — Page 112

CODE 18-77

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Mr Morrice

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17/7

OIL PROSPECTING IN SOUTH CHINA SEA IMP

$28.0 m

HEKI

30 JUL 1980

1. Mr T H Pasteur, Managing Director of Pasco called on 17 July. He had been recommended to Hong Kong and had already seen Mr McLaren.

HEG

HONG KONG

Angels

Engineering Ltd,

Mr March In Mr-March” în

Sea

26

2. He said that he had been asked by the Hong Kong Government (Secretary for Economic Services) to produce a report on the implications for Hong Kong of the possible discovery of oil in commercial quantities in the South China Sea with recommendations for possible action by the Hong Kong Government. He emphasised that while survey work in the six concessionary blocks was largely complete, prospecting drilling would take a long time

(18 months to 2 years). He was preparing reports for the Hong Kong Government based on alternative possibilities ranging from no oil to finds comparable to those in the North Sea.

3.

He saw the main prospects for Hong Kong in the following

areas:

4.

a) Initial servicing for prospection drilling with onshore

facilities, provision of special vessels, etc;

b) the provision of drilling equipment and modules for

platforms. He does not expect Hong Kong to get a significant share of the provision of rigs themselves; (these wheld

a fum

fum fing

c) long-term servicing of production rigs;

d) downstream facilities including refining.

One of the problems for the Hong Kong Government will be to decide on the earmarking of land for oil projects. This is difficult given the shortage of land. Nevertheless Mr Pasteur believes that it would not be uneconomical to allocate areas for land formation, provision of services, etc. with oil facilities in mind. It should not be too difficult to find alternative users if oil surveys are disappointed.

5.

Mr Pasteur asked about Chinese attitudes towards Hong Kong and about current relations between Guangdong and the territory. What would the Chinese attitude probably be to Hong Kong playing a major part inthe provision of facilities? I said that relations were good and China had an interest in encouraging development in HongKong. They would of course have to consider there own economic interests in siting onshore facilities but, depending on whether oil was found, it might well make sense for them to agree to at least some being in Hong Kong.

6. Mr Pasteur asked about likely attitudes in Hong Kong if the Chinese wanted:

i) to send Chinese workers into Hong Kong on oil projects;

ii) to participate in management of facilities in the

territory.

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/I said