CPC plans to search for oil with mainland firm

China National Offshore Oil Corp (中國遠洋石油), the country's No. 3 oil company, said it plans to sign in May an agreement with Taiwan's Chinese Petroleum Corp (中油) to look for oil in the sea between Taiwan and China.

The two state-controlled companies received approval from their governments to form a venture to find oil and gas in the Taiwan Strait off southeastern Fujian province. Chinese Petroleum, or CPC, has asked for more time to sort out "some administrative details" before it signs the agreement next month, said China National, parent of Hong Kong-listed CNOOC Ltd.

"CPC said it's ready to go forward. So are we," said Yang Chunbao, a China National external affairs official. "The agreement now hinges on what the Taiwanese authorities decide."

The venture could signal closer business ties between Taiwan and China, even as political relations between the two remain strained.

Beijing last week demanded Washington clarify President George W. Bush's reference to Taiwan as "the Republic of Taiwan" and asked whether the remark signaled a change in US declared stance of not creating "two Chinas." The Bush administration later said the comment was a verbal gaffe.

Taiwan relies on imports from the Middle East and West Africa for most of its crude oil needs. Taiwan produces just 1,000 barrels of oil a day, about 0.1 percent of its consumption.

China imports about 30 percent of the oil it needs. Oil demand in the world's third-largest oil consumer is expected to increase an annual 4 percent over the next four years to a daily 5 million barrels, the State Economic Trade Commission said.

China National and CPC may extend their cooperation beyond the Tainan Basin in the next few years, Yang said earlier.

"Both companies want this agreement but I can't guarantee it won't be delayed again," said Yang, referring to the previous two failed attempts, in November and January, to seal an agreement.