Joint Venture to Tap Oil and Gas across Taiwan Straits

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Last updated at: (Beijing Time) Sunday, April 21, 2002

Joint Venture to Tap Oil and Gas across Taiwan Straits

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The Chinese mainland's third largest oil operator, China National Offshore Oil Corp (CNOOC), will sign an agreement with Taiwan's Chinese Petroleum Corp (CPC) next month to set up a long-awaited joint venture.

Fu Chengyu, president of CNOOC Limited, the overseas-listed arm of parent firm CNOOC, said on Thursday there will be a final joint venture agreement in May "if no changes" occur in the meantime.

He said the expected joint venture will engage in oil and gas exploration in the Taiwan Straits.

Initial co-operation between the two sides involves seismic testing and drilling in a target area covering 15,400 square kilometres in the Taiwan basin between southern Taiwan and Guangdong provinces.

Co-operation between the two companies signals bright prospects for oil and gas exploration as current geological surveys indicate rich fields exist in the region, Fu said.

He made the remarks during 2002 Chinese Business Summit which opened on Thursday in Beijing.

The Chinese Government approved the co-operation package between parent firm CNOOC and CPC four years ago, but signing of the agreement was postponed as a result of political rows between the Chinese mainland and Taiwan.

The Taiwan authorities gave the green light to the 50-50 joint venture plan this month.

"The joint venture will be the first of its kind between a State-owned enterprise on the mainland and its counterpart controlled by the Taiwan authorities," Fu told China Daily.

Under a plan agreed last August, parent firm CNOOC would form a joint venture to be registered in a foreign country.

Both the mainland and the island are in dire need of oil. Imports account for more than 30 per cent of the mainland's oil consumption and more than 90 per cent of Taiwan's.

CNOOC has signed more than 150 exploration contracts in China's waters with dozens of overseas oil companies.

CNOOC said earlier it plans to invest about US$1 billion in developing gas fields and US$3 billion in oil fields in China's waters over the next five years.

Fu also said at the summit that parent firm CNOOC is planning to re-organize its two subsidiaries for oil field services and assets in preparation for their listings in Hong Kong. But he did not give a specific timetable, saying only "it will be announced soon."

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