China would oppose any move by the Philippines to exploit oil and gas resources on its own in disputed areas of the South China Sea, an academic said Thursday.

Speaking on exploration prospects at a conference in Guangzhou, Liu Feng, deputy head of research for marine science at China's National Institute for South China Sea Studies, said any cooperation among the disputing countries on joint exploration "must include China" and that was the only arrangement that China would be willing to accept.

Vietnam, China, the Philippines, Malaysia, Indonesia, Brunei and Taiwan have long claimed sovereignty over overlapping areas in the South China Sea. Disputes over the region arise mostly because of its suspected vast oil and gas reserves.

Liu was referring in particular to UK-listed Forum Energy's announcement last month that a prospect in Block SC72, awarded by Manila, could hold contingent resources of 37 million barrels of liquids and 1.5 Tcf of gas. The license's main prospectivity is in the Sampaguita gas field, which is near the disputed Reed Bank.

"The best solution is for all parties to work together. I'm optimistic about a resolution, but this is not something that can be concluded in the short term," Liu said.

Weatherford Petroleum Consultants based its estimate seismic data acquired in 2011 in SC72, which is to the southwest of the Philippines. "If the company goes ahead and works on its own, China will likely stop those efforts," Liu said.

SC72 is just to the southwest of two exploration blocks -- Areas 3 and 4 -- that the Philippines is offering in its current licensing round.

China has warned oil companies not to bid for those blocks, claiming they lie in Chinese waters.

Forum's majority owner Philex Mining said May 9 its chairman Manuel Pangilinan had flown to Beijing a few days earlier to meet with a number of Chinese companies, including monopoly offshore operator China National Offshore Oil Corp., to accelerate the development of its block.

Chinese surveillance ships and fishing boats clashed with the Philippine navy last month near the disputed Scarboruough Shoal after the Philippines found eight Chinese fishing vessels near the shoal and sent a warship to arrest them.

Liu's view was echoed by Norwegian company Sevan Drilling's Chief Executive Scott Kerr, who told Platts that the boundary dispute was the major impediment to drilling activity in the South China Sea.

"Geologically there are lots of opportunities but [the disputes] need to be fully resolved before these opportunities can be realized... otherwise it's very difficult for companies to take that kind of risk to step into those areas," he said.

MORE DEEPWATER RIGS AVAILABLE

Sevan is currently anticipating the completion of two ultra deepwater semisubmersible rigs by Chinese shipbuilder Cosco, to be delivered in 2013-2014. The Sevan UDW3 and UDW4 will cost $526 million, up to 15% lower than if they were to be built in Singapore or South Korean yards.

Kerr said having them built in China could also be an advantage when marketing the rigs to Chinese and other Asian operators. "If there are oil companies in Southeast Asia that want to have local content or are looking at using local content in their bids... if they are coming into the South China Sea and want a state-of-the-art rig, we can make that available."

Foreign offshore operators have complained about high import taxes that make it costly to import foreign-registered rigs to operate in China.

A 6% import tax and 17% value added tax is imposed on the value of floating and semisubmersible drilling vessels, according to the Chinese tax ministry.

That, coupled with global deepwater rig tightness in the last few years, has meant some drilling campaigns have had to be delayed.

CNOOC heralded its launch of the Hai Yang Shi You 981 semisubmersible rig earlier this month as a milestone in its deepwater efforts and the vessel is expected to drill three deepwater wells in the South China Sea this year. It could also be leased to foreign operators in China, CNOOC said.

Sevan's Kerr said the company is negotiating with a variety of operators, including those in China, for contracts for the Sevan UDW3 and Sevan UDW4. But he conceded that offshore China demand could remain relatively limited over the short- to medium term. "I think that the big demand for rigs is really in Africa, Gulf of Mexico and Brazil right now. But [activity in China] will pick up after a year or so as drilling starts and discoveries are made."