Canada's Husky Energy Inc. (HSE.T) Monday said it would soon begin developing the Liwan field in the South China Sea after an appraisal well confirmed a major natural gas discovery.

Husky said the appraisal well flowed at a restricted rate of 53 million cubic feet a day, bolstering expectations that it will ultimately produce three times as much gas.

Discovery of the Liwan field in June 2006 triggered a frenzy of activity in the deep waters of the South China Sea, with companies including BG Group (BG.LN), Devon Energy Corp. (DVN) and Anadarko Petroleum Corp. (APC) preparing drilling campaigns in adjacent blocks.

Cnooc Ltd. (CEO), China's largest offshore oil producer by capacity, has the right to back into an commercial discovery with a 51% stake.

-By David Winning, Dow Jones Newswires; 8610-65885848; david.winning@dowjones.com