Philex Petroleum Keen on CNOOC Partnership for South China Sea Natural Gas

Philex Petroleum Corp. (PXP.PH) continues to be keen to partner China National Offshore Oil Corp., or CNOOC, over the possible joint development of natural gas deposits in an offshore prospect in the Philippines, which is also claimed by China.

Philex Petroleum Chairman Manuel Pangilinan told reporters Tuesday that his group hasn’t meet CNOOC representatives since their meeting in Hong Kong in the first quarter of last year. “But we’ve made known to CNOOC that we’re ready to talk to them again,” added Mr. Pangilinan, who is also managing director of Hong Kong-based investment firm First Pacific Co.

Philex Petroleum is the controlling shareholder of London-based Forum Energy, which operates the natural gas prospects in the Reed Bank of the South China Sea. Forum Energy had called off in October 2012 the planned survey of the sea floor to determine the potential gas reserves of Reed Bank, citing harassment by Chinese navy vessels months earlier. After Philex Petroleum made a request in 2012 to the Chinese government to consider a joint exploration of the disputed territory, Beijing nominated CNOOC to be the partner for the project.

Mr. Pangilinan said his Hong Kong office is communicating with CNOOC on when talks could resume.

CNOOC isn’t the first foreign oil exploration group that Philex Petroleum has offered a partnership. Mr. Pangilinan said they initially talked to Shell, but that didn’t work out.

“We’re not an oil major. We have to partner with someone” with deep pockets and who knows the geopolitical risks, said Mr. Pangilinan, alluding to the territorial dispute between the Philippines and China over several areas in the South China Sea.

In its report last year, the U.S. Energy Information Administration estimated that the South China Sea contained approximately 11 billion barrels of oil and 190 trillion cubic feet of natural gas in proved and probable reserves. The EIA also said that U.S. Geological Survey estimates that as much as 5.4 billion barrels of oil and 55.1 trillion cubic feet of natural gas are undiscovered in areas around the disputed Spratly Islands, and that evidence suggests “that most of these resources are likely located in the contested Reed Bank.”

Taiwan and Vietnam have also staked claims on the Reed Bank.

(wordpress.com , Edited by Topco)