CPC Plans to Explore for O&G on Disputed Spratly Islands

TAIPEI - Taiwan's government-run oil refiner CPC Corp. said Friday it plans to conduct a geophysical survey on disputed Spratly Islands in South China Sea next year, reviving the exploration for potential hydrocarbon reserves which was halted more than 20 years ago due to technical difficulties. 

Wang Meng-hsuan, the deputy chief of CPC's Exploration and Production Division told Dow Jones that the geological survey on Itu Aba Island will likely be conducted after March 2013.

Itu Aba Island, also known as Taiping Island in Taiwan and China, is the largest of the Spratly Islands which is thought to be rich in oil and gas deposits. The claimants over the region include China, Taiwan, Malaysia, Vietnam, the Philippines and Brunei, but only Taiwan maintains a military presence on Itu Aba Island.

China has made the strongest claim on the South China Sea, with the country's new passports showing a map that includes the region and conducting military drills. This has stirred vehement protests among neighboring countries, including Vietnam and the Philippines. Beijing's latest announcement that its authorities will board and seize control of foreign ships in the South China Sea has further intensified tension in the region.

"Taiwan has been the administrator of the island. Thus we don't foresee any tension rising from the project," Mr. Wang said.

He added CPC had drilled an exploratory well on Itu Aba Island in the 1980s, but the project was abandoned because the limited technology then didn't allow the company to drill below the reef.

Taiwan, which has virtually no natural resources of its own, imports more than 95% of its hydrocarbon requirements. CPC is currently engaged in several exploration projects with Canadian oil giant Husky Energy Inc. (HSE) and China's government-owned China National Offshore Oil Corp. for natural gas in deep waters in the Taiwan Strait.  

Copyright (c) 2013 Dow Jones & Company, Inc.

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