CNOOC eyes joint exploration deal with Filipino-British Forum Energy in disputed sea

A Filipino-British company has begun talks with China’s state-owned offshore oil producer for a deal to jointly explore for oil and gas in the Reed Bank, a vast offshore area disputed between China and the Philippines, a Filipino official said on Wednesday.

Energy Secretary Jericho Petilla said the talks between London-based Forum Energy and China National Offshore Oil Corporation, or CNOOC, were at a preliminary stage. He added a commercial agreement could hopefully be reached despite the long-raging disputes over the Reed Bank.

The talks were being held abroad, mostly recently in Hong Kong, he said.

The alternative to not entering into a business partnership “is not to drill, probably forever.” Petilla said.

President Benigno Aquino III said any such deal with China would have to conform to Philippine laws. The Reed Bank northwest of the Philippine province of Palawan lies clearly within his country’s exclusive economic zone, Aquino said.

The territorial conflict has hampered oil exploration in the offshore area, Petilla said, but added the Philippines needed to find a way to tap its potentially huge oil and gas deposits to meet his country’s growing energy demand. Natural gas deposits at a nearby offshore field called Malampaya are expected to run out in 2024, he said, adding it takes about a decade to develop such a gas field.