Petronas, the Malaysian national oil company, has sealed a joint venture for an offshore oil exploration project in the Philippines, the leaders of the two countries said today.

Philippine President Gloria Arroyo and Prime Minister Abdullah Ahmad Badawi said Petronas and the state-run Philippine National Oil Co had agreed to a US$14.4 million joint venture to drill for oil off the island of Mindoro.

Petronas Carigali Overseas Sdn Bhd, the overseas exploration arm of Petronas, will take 85 percent of the venture, Arroyo said in a joint press conference.

She expressed hope that the exploratory drilling would help boost the country's self-sufficiency in energy from the current level of about 53 percent.

The joint venture will have a service contract with the Philippine Energy Department to carry out the drilling of one well during the first phase of a seven-year period.

The energy department said that the area offshore of Mindoro island, located some 150 kilometers south of Manila, was "the most attractive exploration acreage in terms of petroleum potential."

Plantation

Abdullah and Arroyo also said they discussed other ways to boost economic ties, including a request for national carrier Malaysia Airlines to fly to the southern Philippines.

Abdullah said they also talked about Malaysians setting up plantations in the country.

"We were talking about palm oil, we were talking about rubber. We have the capacity, we have the expertise," he said.

Abdullah stressed the need for economic development to bring stability to the southern Philippines where Muslim separatist guerrillas remain active.

Malaysia is mediating in peace talks between the Philippine government and the rebels.

Arroyo also said that Malaysia had agreed to provide technical assistance for a Philippine plan to set up a national ID system. - AFP