RP, China to map oil deposits in Spratlys

RP, China to map oil deposits in Spratlys

Agence France-Presse, Manila

China and the Philippines are to jointly study potential oil deposits around the disputed Spratly Islands in the South China Sea, and Vietnam and other claimants are welcome to take part, Filipino officials said Thursday.

China National Offshore Oil Corp. (CNOOC) and the Philippine National Oil Co. (PNOC) signed an agreement in Beijing on Wednesday to conduct a seismic survey of the area, the officials said.

Seismic surveys of prospects are the first stage in an oil exploration project, though Filipino officials insist no actual drilling for oil would be conducted in the three-year joint project. The two state firms will split the cost.

The signing was a highlight of the three-day state visit to China of President Gloria Arroyo, who witnessed the signing.

"The agreement expressly stipulates the principle that the joint undertaking does not undermine the basic positions of the Philippines and China of the South China Sea issue, the foreign department said in a statement.

"There is an understanding between the Philippines and China that the PNOC-CNOOC undertaking will be open to the participation of a third party, such as companies of other claimant states," it said.

"The Philippines will strongly support discussions for the participation in the undertaking of PetroVietnam, if the company is interested," it said, referring to Hanoi's national oil company.

Though the statement did not specify the Spratlys, the island group is the only known area in the South China Sea where Beijing, Hanoi and Manila have rival territorial claims.

The archipelago, which sits over rich fishing grounds, lies near key sea lanes and reputedly sits on vast oil reserves, is also claimed in whole or in part by Brunei, Malaysia, and Taiwan.

The Philippines energy department said the project "will be a pre-exploration study solely to collect, process and analyze seismic data. No drilling or development is covered under the study."

The foreign department said "the wisdom of the cooperative efforts like joint development are part of confidence-building measures pending the final and comprehensive settlement of territorial disputes and overlapping maritime claims in the area."

The bilateral agreement "is a step towards possible discussions in the future between and among claimants on provisional cooperative arrangements in the South China Sea pending the complete and final resolution of disputes in the area."

As it stands, however, Manila was in no position to sign an exploration or production agreement should the area yield commercially viable reserves, the foreign department said.

This was because the Filipino constitution explicitly provides that the Philippine government "should have full control of activities related to the exploration, exploitation, and utilization of natural resources in the Philippine territory."