MANILA - A unit of Australia-based BHP Billiton and state-run Philippine National Oil Co.-Exploration Corp. (PNOC-EC) will jointly explore oil and gas in Palawan.

In a disclosure to the Philippine Stock Exchange on Wednesday, PNOC-EC said it has entered into an agreement with BHP Billiton Petroleum Pty. Ltd. to explore Service Contract 59 in the Palawan basin.

Under the deal, BHP Billiton will hold 75% of the exploration and production of the SC 59 block, while the remaining 25% will be retained by PNOC-EC.

The state-run firm said BHP Billiton will become the operator of the service contract area once it has obtained all the necessary approvals from the Energy Department.

SC 59 covers an estimated 14,760 square kilometers (5,698 square miles), and is located in water depths of up to 3,000 meters (9,850 feet). PNOC-EC said it earlier conducted exploration activities in the area after acquiring more than 2,000 kilometers of seismic lines.

"Additional data gathering is expected to begin in December 2009 with a 2D seismic survey," PNOC-EC said.