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.