China National Offshore Oil Corp. (CNOOC), the country's largest offshore oil producer, is in talks with a US firm for a possible product-sharing contract on an oilfield in the South China Sea.

The contract, likely to be inked in a few weeks, will make Texas-based Newfield Exploration Co. the first to be affected by a new policy, which will levy a five-percent tax from Aug. 1 on offshore oil exports by foreign firms that co-develop Chinese oilfields with domestic firms.

The policy is seen as another measure the Chinese government has taken to curb exports of important resources, after a five-percent tax was collected on exports of coal, coke and crude oil from November last year.

But it appears to have failed to dull the enthusiasm of foreign firms intending to exploit oil in China's offshore waters.

The policy change would have "a very limited impact" on CNOOC's cooperation with foreign firms in oil exploitation, Tuesday's Shanghai Securities News quoted Xiao Zongwei, general manager of CNOOC's investor relations department, as saying.

He declined to comment on the cooperation between his company and Newfield on the new offshore oilfield in the South China Sea, the paper said.

The South China Sea has long been considered to have rich oil and gas resources, with a number of foreign firms - including Canada's Husky Energy Inc., Australia's Roc Oil Co. and Britain's BG Group Plc. - prospecting for and exploiting oil there.

For the last 25 years, the Chinese government had exempted such firms from taxes on offshore oil exports to encourage them to cooperate with domestic firms because offshore oil exploitation involves high risks and requires advanced technology.

The new oilfield was in a 5,424-square-kilometer block, with a water depth between of 10 meters and 60 meters, the paper said.

(Xinhua News Agency August 1, 2007)