Chinese, Philippine firms join forces to look for oil in South China Sea

Chinese, Philippine firms join forces to look for oil in South China Sea

Peter Harmsen
Beijing

A Chinese and a Philippine oil company have agreed to jointly
look for oil and gas in the South China Sea after a recent
Chinese proposal to reduce tensions in the area, state media said
on Thursday.

The China National Offshore Oil Corp. (CNOOC) and the
Philippines National Oil Co. will set up a committee that is to
select parts of the sea where exploration may be carried out, the
China Daily reported.

The two companies have also agreed on a program to "review,
assess and evaluate relevant geological, geophysical and other
technical data available to determine the oil and gas potential
in the area".

The South China Sea has been the object of low-intensity but
prolonged rivalry in recent years as adjacent countries believe
it might hold large energy reserves, although that has never been
proven.

Brunei, Malaysia, the Philippines and Vietnam, as well as
China and Taiwan claim the Spratly Islands, a potentially oil-
rich archipelago in the South China Sea.

Tensions however have been on the decline, arguably reflecting
renewed efforts by China to be on friendly terms with its
neighbors.

"It's more important for China to develop peacefully and
progressively, and a stable environment is necessary for China to
develop," said K. K. Leung, an expert on Chinese politics at City
University of Hong Kong. "So conflict in the area is the last
resort."

When China's second-ranking leader Wu Bangguo visited the
Philippines in late August, he proposed joint oil exploration and
development in the area in a gesture seen as helpful in easing
tensions in a potential flashpoint.

The Association of Southeast Asian Nations last year signed a
treaty with China aimed at preventing an escalation of tensions
over the Spratlys.

In a move notable mostly for its symbolic value, China in
early October signed a non-aggression pact with the 10-member
group.

All countries around the South China Sea have said they are
ready to avoid conflict in the area.

But the willingness to compromise could come under strain if
the much-dreamt-of huge oil reserves were suddenly to emerge,
Leung said.

Significantly, the new Sino-Philippine agreement will not
include exploration in the particularly sensitive Spratly region,
according to newspapers in the Philippines.

While China has said it is wants to work with other nations in
looking for oil in the South China Sea, it remains committed to
make the area part of its strategy to reduce its dependence on
Middle Eastern oil.

CNOOC has been active in the region, and is already the
largest offshore oil producer in Indonesia.

The China Daily on Thursday said Wei Liucheng, former
president of CNOOC, has been nominated for the post of governor
of Hainan, an island province in the northernmost part of the
South China Sea.

The newspaper referred to media speculation that the Hainan
government might take advantage of Liu's experience in the oil
industry and his relations with foreign oil companies to tap the
area's potential.