China and Taiwan in historic oil exploration deal

Taiwan's Chinese Petroleum Corp (CPC) and the mainland's China National Offshore Oil Corporation (CNOOC) have signed an historic deal to spend $45 million drilling three exploration wells in the Taiwan Strait.

The wells would be drilled in the Tainan Basin in the 160km-wide strait that separates Taiwan from the Chinese mainland. CPC said it had studied the area with CNOOC over the past two years and found many places that might have oil and gas deposits.

If oil was discovered and found to be commercially viable, the two companies would evenly split any oil and gas production. The Taiwanese company would manage the finances of the joint venture, while its Chinese counterpart would manage the operations, the companies said.

Political relations between Taiwan and China have been frosty since the communists took over running the mainland in 1949, after which Nationalist forces fled to Taiwan. China considers Taiwan a renegade province and has on numerous occasions threatened invasion if it declares independence.