China and Taiwan to drill for oil together

CNOOC is China's third biggest oil producer

China and Taiwan might soon sign a contract to explore for oil in the Taiwan Strait, officials have said.

It would the first substantial joint venture between state-run firms from China and Taiwan, which the government in Beijing views as a rebel province.

The exploration project in the 100-mile-wide waterway would involve Taiwan's Chinese Petroleum Corp (CPC) and China-based China National Offshore Oil Co (CNOOC), officials from both companies have confirmed.

The joint venture proposal is likely to benefit from Taiwan president Chen Shui-bian's plans to increase economic ties with China.

Taipei 'basically supportive'

He has welcomed proposals from a 120-member council of cross-party advisers to lift bans on direct trade, travel and communications with China, which have been in place since 1949.

"The government's attitude is basically supportive," a spokesman for the Taiwan company said.

An outline of the proposals will be sent to Taiwan's cabinet soon, said Liao Tsang-lung of CPC.

But the venture would need approval from both governments and Beijing's stance is less certain.

Beijing claims ownership

Any exploitable reserves will be owned by China, said Xiao Weidong, a spokeman for CNOOC.

He said CNOOC and CPC would both invest in the project, but the China-based company would hold the 51% majority share.

The two companies have been exploring for oil together since 1996 in the waters off Taiwan and China's southern province of Guangdong, oil analysts say.

Co-operation on the joint-venture proposal "went smoothly as we have been able to avoid the sovereignty issue," said Mr Liao of CPC.

Trade talks

Beijing has indicated it will use the framework of the World Trade Organisation (WTO) to facilitate talks on trade issues - including those involving the Taiwan Strait - with Taiwan once they both join.

That is likely to be early next year if, as expected, Beijing's membership is ratified at the WTO ministerial meeeting in Doha, Qatar, in November 2001.

Taiwan's membership will then follow automaticially.