Philex Petroleum Still in Talks With Cnooc on Reed Bank Drilling

MANILA--Philex Petroleum Corp. (PXP.PH) in still in talks with China National Offshore Oil Corp. (CEO ) for a possible joint development of natural gas prospects in a contested area in the South China Sea, the chairman of the Philippine oil explorer said Friday.

Philex Petroleum is the controlling shareholder of the operator of the natural gas prospects in the Reed Bank.

"We can't proceed without them, that's the reality--unless we can enforce our own right to keep them out. In the end, it depends on" both governments, Manuel Pangilinan told Dow Jones Newswires after the annual meeting of Philippine Long Distance Telephone Co. (TEL.PH). Mr. Pangilinan is also the chairman of PLDT.

The Department of Energy has extended Forum Energy PLC's (FEP.LN) right to drill in the Reed Bank by two years to 2015, so Philex Petroleum and Cnooc still have time to reach an agreement, he said.

Philex Petroleum owns a majority stake in London-based Forum Energy.

In October Philex Petroleum called off a planned survey of a sea floor in the Reed Bank, necessary to determine potential gas reserves, due to concerns over harassment by the Chinese navy as had happened earlier.

After Philex Petroleum made a request last year to the Chinese government to consider the joint exploration, Beijing nominated Cnooc to be the partner for the project.

Mr. Pangilinan said a joint exploration with Cnooc will also require the Philippine government's approval.

Write to Cris Larano at [e-mail]

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