CPC Corporation of Taiwan, the state-owned oil company, said yesterday it hoped to resume joint oil exploration soon with China National Offshore Oil Corporation (CNOOC) in the Taiwan Strait, which divides the self-governing island from the Chinese mainland. The plan reflects hopes that a warmer political climate between Beijing and Taipei could revive the sensitive project, which has been held up for years by tensions between China's Communist government and the island's democratically elected government. Pan Wenent, CPC chairman, met CNOOC executives in China last month and conveyed his company's wish to drill a new test well under a joint venture agreement between the two firms that expires at the end of this year, CPC officials said. The two companies drilled one test well in a basin in the southern part of the Taiwan Strait in 2005, but no oil was found. After that, as political relations soured, both companies failed to get green light from their governments for a second well. "This has now changed, and we have decided that the sooner we go ahead the better," CPC said. However, CPC said further talks with CNOOC were necessary because the Chinese company had not yet decided whether to go ahead. "For us, this exploration project is more important than ever because international crude prices are at record highs and rising," said a CPC executive. "But since this field is at the middle line of the Taiwan Strait, it is considered sensitive by the Chinese, and it's not a priority for them." Taiwan possesses almost no natural resources, and relies on imports for more than 95 per cent of its oil and gas supplies. The island's government has long forced CPC to subsidise domestic petrol, diesel and fuel prices in an effort to shield consumers and businesses from energy inflation. However, the recently elected Kuomintang government, which takes office this month, has said it will raise domestic fuel prices because the financial burden has become too heavy for CPC. Mr Pan's renewed talks with CNOOC followed the KMT's resounding victory in presidential elections in March. The KMT views ties with China more pragmatically than the ruling Democratic Progressive Party, some of whose members support formal independence for the island. Copyright The Financial Times Limited 2008