Chinese Petroleum Corp (
CPC and China National Offshore Oil Corp (CNOOC,
The agreement paves the way for both state firms to jointly develop the Chaoshan block in the open seas about 140km from the southern port city Kaohsiung.
"As far as I know it's the first large-scale cooperation between two state-owned enterprises across the strait," said CNOOC President Wei Liucheng (
The agreement was the second major commercial deal involving state-controlled companies. China Eastern Airlines signed a pact last year to sell a 25 percent stake in its cargo unit to Taiwan's China Airlines Co (
CNOOC, parent of listed CNOOC Ltd, has received Beijing's approval for the project, which calls for the establishment of a 50-50 joint venture.
Chinese Petroleum and CNOOC had conducted a geophysical survey of the 15,400km2 block in 1996 and found the area likely to have oil and gas. Whether the block contains any natural gas or oil requires actual exploration.
"The signing of the oil deal means our cooperation on oil exploration has moved from joint study to joint investment. In the next stage, we will move from joint investment to joint development," Chinese Petroleum Chairman Regis Chen (
The Mainland Affairs Council had dragged its feet on approving the deal but gave the green light last month.
Chinese Petroleum was reluctant to play up the signing ceremony, apparently worried that cooperation in the strategic energy sector would send the wrong signals to Taiwanese businessmen pressing the government to further ease curbs on mainland-bound investments.
"The two sides had hoped for a breakthrough on the economic fronts, but issues such as ideology, titles, and `one China' always stood in the way," said Chen Ming-chang (
"Speaking purely from the business point of view made things a lot easier," Chen said, adding that economic integration would improve the political climate.
Chinese Petroleum and CNOOC officials avoided politics at the signing ceremony, stressing the deal was "equal and mutually beneficial."
"A deal of such significance can't go ahead unless authorities on the two sides agree," CNOOC's Wei said.
"We share the same culture, the same language and the same work habits. I think the cooperation will be pleasant and smooth."
Fence-mending talks between Taipei and Beijing have deadlocked since July 1999, when then president Lee Teng-hui (李登輝) redefined bilateral relations as "special state to state" in an attempt to break Taiwan out of diplomatic isolation.
Mounting pressure from Tai-wan's private sector forced the government to ease last month a ban on microchip makers building plants in China. But tough conditions were attached.
Chinese Petroleum has been aggressively exploring investment opportunities to cope with rising competition since 2000, when the government allowed a private company to enter the country's oil market, ending the oil giant's decades-old monopoly.
It faced a further threat to its dominance in the local market after the government lifted curbs on oil product imports this year.
Chinese Petroleum has also been in talks with China National Petroleum Corp to refine crude for China's biggest oil-and-gas producer as part of efforts to use idle capacity due to a supply glut at home. Officials declined to comment on the talks.
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