Philippines offers up China-claimed oil prospects

The Philippines will offer three oil and gas exploration contracts in the disputed South China Sea later on Tuesday, including two in areas claimed by China, an official said.

All three blocs off the coast of the western Philippine island of Palawan are part of Philippine territory, energy undersecretary Jose Layug said, dismissing China's territorial claims.

Tensions between the Philippines and China over the South China Sea have been running high due to disputes over the Reed Bank and the Spratly islands to the south of the prospects, and Scarborough Shoal to the north.

But Layug dismissed suggestions the latest quarrel, over the shoal, would dampen interest in the bid.

"Historically, the Philippines has always attracted bids from medium-sized exploration companies. They do seismic surveys, and if they have (good) results, that's when the big boys come in," Layug told AFP.

The two disputed areas for exploration are just beside the Philippines' existing natural gas fields, while the third lies closer to the Palawan coast.

China claims nearly all of the South China Sea even up to the coast of its neighbours.

Four foreign firms -- Australia's Nido Petroleum, Spain's Repsol, GDF Suez of France and Italy's Eni -- are among 40 companies that have met official requirements to submit bids.

But Layug said he did not know if any of them would make offers for the contracts, which are expected to be awarded within six months, with each of the projects to involve spending hundreds of millions of dollars over upto seven years.

Philex Petroleum, one of the pre-qualified bidders, is known to have held talks earlier this year with representatives of state-owned China National Offshore Oil Corp.

While CNOOC is not taking part Tuesday, Layug said it would be welcome to enter into a partnership with any of the winning bidders.

"They are always welcome to take part in any of our service contracts for as long as they recognise Philippine law," he said.

The Philippines and China entered into a tense stand-off over the Scarborough Shoal in April when Chinese patrol vessels blocked the Philippine Navy from arresting Chinese fishermen.

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

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