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A Chinese state-run firm is poised to take over majority control of an oil exploration venture in offshore Palawan, Energy Undersecretary Jose M. Layug, Jr. said.

Mr. Layug said, China National Offshore Oil Corp.’s (CNOOC) application to buy a 51% stake in the consortium in charge of Service Contract 57 off northwest Palawan should receive the Energy department’s endorsement.

The development comes as Manila has in recent months accused its East Asian neighbor of taking increasingly aggressive action in staking its claim to disputed territory in the South China Sea.

Mr. Layug said “It’s a pending approval since the past administration so we’re fast-tracking it.”

The proposed deal had been forwarded to the Energy department in 2006. Such “farm-in” agreements allow new investors to pour in capital into the venture at various points in the exploration efforts.

If approved, the agreement will leave current consortium members Philippine National Oil Co. - Exploration Corp., a state-owned firm, with a 28% stake in the venture while Mitra Energy Ltd. will control 21%.

Service Contract 57 is located in offshore northwest Palawan and covers an area of 7,200 square kilometers west of the Calamian Islands.

The Energy department “doesn’t see any problems in the farm-in since CNOOC is one of the most well respected state-owned exploration companies.” Mr. Layug said.

The firm comes on top of a few more Chinese companies that reportedly expressed interest in bidding for 15 potential oil and gas sites that were rolled out at this year’s contracting round. These areas cover about 10,000 hectares and cover both onshore and offshore areas.

Mr. Layug said, “They haven’t identified which areas they will bid on. They recognize however that the sites being offered are within Philippine territory.”

There are three areas being offered in northwest Palawan, six in east Palawan, one in Cagayan, one in Central Luzon, two in Mindoro Cuyo, one in Cotabato and one in Sulu Sea.

Early next year, investors have until December to signify their intention to bid and the department will award the service contracts. None of the areas being offered are in the disputed waters which are currently being contested by China, the Philippines, Vietnam, Brunei, Malaysia and Taiwan.