Thu, Feb 07, 2002 page17

• Cross-strait oil exploration deal looks to be in doubt

  • By Richard Dobson / STAFF REPORTER
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  Joint oil exploration between state-run Chinese Petroleum Corp (中油) and a Chinese oil giant remains held up by the nation's government as it reviews the plan, according to executives who now expect the deal to be approved by early April.

  Chinese Petroleum was originally expected to sign the deal with China National Offshore Oil Corp (CNOOC,中國海洋石油) -- which is also government controlled and accounts for 10 percent of China's crude production -- in December. Drilling was scheduled to begin in the Taiwan Strait last month.

  Despite assurances from Taiwanese officials and the company that the deal will go ahead, the delay has some observers wondering whether the project -- which essentially would be a pair-up between authorities in Beijing and Taipei -- may be shot down over politics.

  Tsai San-lang (蔡三郎), vice president of Chinese Petroleum, told reporters on Tuesday that it had been previously decided that the deal was to be signed in Taipei on Jan. 24.

  But as the Mainland Affairs Council was still reviewing the plan's details, an agreement may now not be signed until the end of March or even early April, Tsai said.

  Chen Ming-tung (陳明通), vice chairman of the Mainland Affairs Council, told the Taipei Times the project is still under review. The government supports the plan and indeed welcomes this kind of cooperation, Chen said.

  "This is definitely a landmark case," Chen said, noting that "both sides had tried to avoid political concerns," especially because cross-strait affairs remain frosty.

  Acknowledging the inherent political sensitivities, Chen said that engineering a workable plan between the two companies will involve "building an effective management mechanism to avoid endangering national security."

  But one regional energy analyst, who requested anonymity, said he was doubtful of a tie-up between the two political arch rivals. An agreement that would involve Chinese and Taiwanese working side by side smack in the middle of the Taiwan Strait -- one of the world's most potentially volatile flashpoints -- isn't likely to come about any time soon, the analyst said.

  "This is way beyond a business decision," the observer said. "I think it unlikely that the authorities in Beijing will ultimately allow the two sides to work together, regardless of how much CNOOC might want it."

  The analyst questioned why Beijing would be willing to help Taiwan ease its virtual dependence on energy imports by jointly drilling for oil, which accounts for 50 percent its primary energy consumption. "Of course CNOOC would like to put their well caps around the Taiwan island but this is way beyond a business decision," the analyst said.

  As a net oil importer since 1993, Beijing has made it a priority to expand its oil sources by investing in exploration and production abroad.

  If the project with Chinese Petroleum goes ahead, it will see both companies drill for oil in the Tainan Basin, which covers 15,400km2 and spans the territorial waters of both China and Taiwan.
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