Filipino, US firms eye China joint oil project

Posted at 07/18/2012 11:04 PM | Updated as of 07/19/2012 9:57 AM

MANILA, Philippines - Some American and Filipino companies are interested in a Chinese-led oil and gas exploration project in the disputed waters of the West Philippine Sea, the head of China's third-largest state-owned oil company said Tuesday.

Other companies from Malaysia and Thailand are also interested in bidding for the project, according to state-owned website China.org.cn.

China National Offshore Oil Corp. (CNOOC) chairman Wang Yilin, however, did not name the oil companies supposedly interested in the exploration project, which is located just off the coast of Vietnam.

CNOOC earlier 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 in the West Philippine Sea.

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."

According to the Chinese government website, the project is not getting much interest from foreign oil companies because of "concerns over the South China Sea oil reserves and returns on investments."

A researcher from China's Energy Research Institute of the National Development and Reform Commission said the ongoing territorial dispute of the area is affecting CNOOC's efforts to cash in on the project.

"If China's grip becomes stronger on the South China Sea's sovereignty, we will see more oil companies participating [in development]," the researcher said.

MVP wants CNOOC as Reed Bank partner

CNOOC is also being eyed by Filipino businessman Manny V. Pangilinan as one of several partners in the development of natural gas fields around the Philippines-controlled Reed Bank (Recto Bank) in the Spratlys.

Pangilinan chairs Philex Petroleum Corp., which controls UK-based oil and gas firm Forum Energy that is exploring Reed Bank under Service Contract 72 in the Spratlys.

The Washington, DC-based Stimson Center think-tank said the business magnate went to China recently to talk to CNOOC executives about a possible partnership agreement, despite the recent standoff between Manila and Beijing over Scarborough Shoal. 

President Benigno Aquino said he has no problem with Pangilinan's plan to invite CNOOC for the Reed Bank project because it falls under Philippine jurisdiction.

However, global intelligence company Strategic Forecasting, Inc. (Stratfor)  has warned that China is using CNOOC as its lead in pressing its territorial claims in the West Philippine Sea.

"CNOOC's enhanced deep-sea exploration capability has also bolstered Beijing's strategy to move forward its joint exploration proposal in the disputed area, forcing claimant countries to reconsider their plans to exclude China from joint development projects," the think-tank said in a recent analysis.

"On the surface, joint exploration appears to be an offer of conciliation. But that offer comes with a price: With Chinese state-owned companies leading the way by providing the bulk of funding and technology and laying most of the physical infrastructure, the move will significantly strengthen China's claims at the expense of those of its neighbors," it added.

"Other countries will be invited to help and in turn reap some benefit, but in the end China will provide the rigs, money and manpower," it said.