China oil firm to cash in on West Philippine Sea

Posted at 06/27/2012 10:26 PM | Updated as of 06/28/2012 9:55 AM

MANILA, Philippines - One of China's 3 largest state-owned oil companies is looking to cash in on vast energy reserves underneath the disputed waters of the West Philippine Sea.

China National Offshore Oil Corp. (CNOOC) has announced that it is offering 9 offshore blocks covering an area of  more than 160,124 square kilometers for joint exploration and development with foreign companies.

CNOOC announced the auction in its website, which shows a map of the blocks being offered for bidding.

The areas eyed for exploration are closer to the shores of Vietnam than the Philippines.

CNOOC said foreign companies interested in the project will be allowed to access and buy the company's current data on the blocks.

The auction has triggered protests from Vietnam, which called the project "illegal."

The Vietnamese foreign ministry said in a statement Tuesday that the blocks "lie entirely within Vietnam's 200-mile exclusive economic zone."

China, however, is unfazed.

Chinese Foreign Ministry spokesman Hong Lei described the project as a "normal business activity" that allegedly follows "Chinese laws and international practices."

A China National Offshore Oil Corp. map shows the 9 blocks the state-owned firm is offering to foreign oil companies for joint exploration and development. 

MVP eyes joint project with CNOOC

In the Philippines, CNOOC is being eyed by businessman Manny Pangilinan as one of several partners for an oil exploration project in the disputed Recto Bank (Reed Bank) also in the Spratlys.

CNOOC has spent more than $1 billion to develop and build a new ultra-deepwater rig that is designed for the West Philippine Sea, according to analysts.

The Haiyang Shiyou (Offshore Oil) 981 rig, which is currently drilling near Hong Kong, is expected to be deployed to explore in deeper and more oil-rich waters further south.

President Benigno Aquino on Monday said the Recto Bank joint project must operate under Philippine authority and follow the terms and conditions stipulated in the service contract.
 
“‘Yung license itself, the service contract, nakalagay na doon lahat ng guidelines, lahat ng mga conditions. He has been apprised of the same. He knows the conditions emanating thereto. This is a major project. There will be a lot of finances that are needed and it is incumbent upon him to source these financing also. So long as it complies with the terms and conditions as stipulated in the service contract, we have no issue with this venture,” Aquino said.

He said Pangilinan "will be undertaking the venture based on the authorization coming from the Philippine government.”

Pangilinan's Philex Petroleum Corp. controls UK-based oil and gas firm Forum Energy, which is conducting exploration in Recto Bank under Service Contract 72.

China patrols

State-owned Xinhua, meanwhile, reported on Wednesday that China has deployed 4 marine surveillance ships sailed from the coastal city of Sanya to the West Philippine Sea to conduct regular patrols.

Quoting an unnamed CMS official, Xinhua said the 4 ships will travel more than 2,400 nautical miles during their patrols and may hold "formation drills."

The regular patrols began in 2006 as part of China's efforts to protect China's maritime interests, it added.

The ships are operating under China's State Oceanic Administration, which manages the country's marine resources.

China, the Philippines, Taiwan, Vietnam, Brunei, and Malaysia are claiming in whole or in part the West Philippine Sea and its oil and gas deposits. - with reports from Willard Cheng, ABS-CBN News; Agence France-Presse; Reuters