MANILA May 8 The Philippines' Philex Petroleum
Corp said on Tuesday it has discussed a possible
partnership with Chinese offshore oil producer CNOOC to develop
a natural gas prospect in the disputed South China Sea, a deal
that may help ease tension between the two sides.
China meanwhile warned the Philippines that confrontation
over an island in the South China Sea could worsen and Beijing
has made "every preparation" to counter what it called potential
expansion of the conflict by Manila.
Philex would need a major foreign partner to develop its
Sampaguita project, or "service contract 72", estimated to cost
billions of dollars, chairman Manuel Pangilinan told reporters.
"I received an official invitation from CNOOC. I was in
Beijing last week and we discussed SC 72," he said, referring to
the exploration permit issued by the Philippines' Department of
Energy covering the Sampaguita gas discovery in the Reed Bank in
the disputed waters.
"Whether it's the Chinese that we will eventually partner
with or the non-Chinese, I think it is necessary for us to
partner with an international oil major who have the expertise
and the money," he said.
"(Sampaguita) will take six to 10 years to develop, that's
why it's important for us to start now."
It was in the Reed Bank where Chinese navy vessels tried to
ram one of the survey ships of Forum Energy, a unit of
Philex, almost halting its research work last year.
Pangilinan declined to give more details on the talks with
CNOOC, or China National Offshore Oil Corp, saying
he was not at liberty to do so.
"Any discussions with them at this stage is privileged," he
said, adding the Philippine government was aware of the talks.
A partnership between Philex and CNOOC on the Sampaguita
project, which is estimated in a 2006 study to hold up to 20
trillion cubic feet of natural gas or more than five times
initial estimates, may help defuse tension.
China has territorial disputes with the Philippines,
Vietnam, Brunei, Malaysia and Taiwan across the South China Sea.
A Philippine coast guard ship and two Chinese maritime
surveillance vessels faced off near the Scarborough Shoal in
waters believed to be rich in oil and gas in early April after
what China said was harassment of Chinese fishing boats.
Chinese Vice Foreign Minister Fu Ying summoned the Charge
D'affaires at the Philippine Embassy Alex Chua on Monday to
complain for the third time in less than a month over a
"The Philippines clearly has not recognised that it is
making a serious mistake," Fu said, adding it was "difficult to
be optimistic" about the dispute.
"We hope the Philippines will not misjudge the situation and
not escalate tensions without considering the consequences," she
said in a statement posted to the ministry's website
(www.mfa.gov.cn) on Tuesday.
"China has also made every preparation to respond to the
Philippines' intensification of the situation," Fu said.
Philippine Foreign Affairs Secretary Albert del Rosario
reiterated the rules-based approach in the U.N. Convention on
the Law of the Sea (UNCLOS), which Manila signed in 1984, was
the way forward in addressing the disputes.
"UNCLOS has never been more important for the Philippines
than today, when overlapping maritime claims threaten as never
before the peace and prosperity in our part of the world," he
said in a statement.
The disputes are pushing the Philippines to seek closer
cooperation with its chief ally the United States, drawing
(Reporting by Erik dela Cruz and Manuel Mogato in Manila and
Michael Martina in Beijing; Editing by Rosemarie Francisco and