State-owned PNOC Exploration Corp. (PEC.PH) Tuesday said it is discussing with BHP Billiton Ltd. (BHP) a potential joint venture at the West Balabac oil block in central Philippines.

PNOC-EC is talking to BHP Billiton about the latter's participation in a service contract for West Balabac - or SC 59 - in Palawan, the company said in a statement to the stock exchange.

Discussions are focused on how output from the block would be shared, the company said, adding that BHP would have to finance exploration at the block.

SC 59 covers an area of about 1.5 million hectares in Southwest Palawan, near Sabah. The contract was awarded to PNOC-EC Jan. 13, 2006.

-By Rhea Sandique-Carlos, Dow Jones Newswires; 632-848-5051; rhea.sandique-carlos@dowjones.com