Philippines to bid out three South China Sea blocs

The Philippines will bid out oil exploration contracts in the South China Sea despite recent tensions with China over conflicting territorial claims in those waters, an official said Wednesday.

The three blocs in the South China Sea, off the coast of the western Philippine island of Palawan, are believed to be the most promising for oil and gas deposits, said Energy Undersecretary James Layug.

"All reserves in that area belong to the Philippines. We will only offer areas within our exclusive economic zone," he said at the sidelines of an energy forum in Manila.

The area, known as the northwest Palawan basin, is just beside the Philippines' existing natural gas fields, which already provide 40 percent of the electrical power of the main Philippine island of Luzon, said Layug.

"These are all beside our existing service contracts so there is no doubt that these areas belong to the Philippines," he added.

He said historically Philippine energy exploration had the most success in these areas off Palawan, indicating the three new blocs might also hold large oil and gas reserves.

The exploration contracts for the three blocs will be bidded out on July 31, he said.

Tensions between the Philippines and China have recently risen due to conflicting claims over parts of the South China Sea.

The focus of the latest conflict is the Scarborough Shoal, which the Philippines insists is well within its exclusive economic zone but which China claims along with most of the South China Sea.

Another South China Sea area, the potentially-oil-rich Reed Bank, is also due for development by the Philippines but has been claimed by China.

Last year, the Philippines accused China of harassing an oil exploration ship at Reed Bank.

Layug said China had not objected to the plans to bid out the contracts for the three blocs.

China claims nearly all of the South China Sea even up to the coast of its neighbours. The Philippines has cited international law to bolster its claims.

Ministers and diplomats representing China and Southeast Asian countries including the Philippines were meanwhile Wednesday meeting at an ASEAN summit in Cambodia, working on a code of conduct designed to ease tensions in the South China Sea, but were struggling to reach agreement.

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