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The Liwan Gas Project. Image courtesy of Husky Energy.

Husky Energy and China’s CNOOC started production at the Liuhua 34-2 gas field in the South China Sea Monday, the second field to be brought online at the Liwan Gas Project this year.

“Liuhua 34-2 will contribute to the ramp up of Liwan next year. The project is making a sound contribution to our business and is now delivering significant cash flow from gas sales that are at a higher price than in North America,” Husky CEO Asim Ghosh said.

The Liuhua 34-2 field is expected to produce 30 million cubic feet of gas per day.

The Liwan Gas Project is located 186 miles southeast of the Hong Kong Special Administrative Region.

The project includes the Liwan 3-1, Liuhua 34-2 and Liuhua 29-1 fields.

All three fields share a subsea production system, subsea pipeline transportation and onshore gas processing infrastructure.

The Liwan 3-1 field began production in March 2014.

Natural gas from Liwan 3-1 and Liuhua 34-2 is being processed at the onshore gas terminal at Gaolan and sold to the mainland China market, with initial production covered by fixed-price gas sales agreements.

Calgary-based Husky holds a 49 percent interest in the production sharing contract (PSC) for the Liwan Gas Project and operates the deepwater infrastructure.

CNOOC holds a 51 percent interest in the PSC and operates the shallow water facilities and onshore gas terminal.