COS wins joint oil exploration contract

COS wins joint oil exploration contract

Agence France-Presse, Beijing

A Chinese firm has won a joint contract from the state oil
companies of China, the Philippines and Vietnam to search for oil
and gas in a disputed area of the South China Sea, state media
said on Saturday.

China Oilfield Services Ltd. (COS), a subsidiary of China
National Offshore Oil Corporation (CNOOC), was given the go-ahead
to explore around the disputed Spratly Islands chain after
agreement by the three nationalized conglomerates, Xinhua news
agency said.

CNOOC, Philippine National Oil Co. (PNOC), and Vietnam Oil and
Gas Corp., also known as PetroVietnam, agreed in March to conduct
seismic work programs -- setting off explosions to monitor the
shock waves for pockets of oil and gas -- over three years over
an area of about 143,000 square kilometers.

A CNOOC official hailed the contract, saying it was an
important step by the three countries to jointly implement the
Declaration on the Conduct of Parties in the South China Sea,
Xinhua said.

The declaration, signed between China and members of the
Association of Southeast Asian Nations in 2002, is a major
political document on peacefully resolving disputes in the
resource-rich South China Sea, it said.

Besides the three countries, Brunei, Malaysia and Taiwan also
have claims to the Spratlys Islands. All claimants, except
Brunei, station troops on parts of the archipelago.

Analysts say the joint exploration of the region surrounding
the Spratlys is part of China's quest for energy to run its
booming economy.

The exploration award was announced only weeks after CNOOC's
US$18.5 billion bid to buy the U.S.-based Unocal was turned down
by shareholders of the U.S. company.

It also comes after the China National Petroleum Corporation
(CNPC) announced this week that it would buy Calgary-based
PetroKazakhstan Inc. for $4.18 billion.

Under the bid awarded on Friday, COS would handle a two-
dimensional seismic exploration project, Xinhua said. No
information was given on how much the deal was worth to the
company.

The three national oil companies have also agreed to a more
detailed three-dimensional project, but it was not immediately
clear if a contract had been awarded.

Listed in Hong Kong in 2002, the COS is China's largest
offshore oil field services company, with a 65 percent stake held
by the CNOOC.