UNITED NATIONS -- In a new twist of climate irony, a nation that says its very survival is threatened by climate change is about to embark on a mission to become a major supplier of oil and natural gas, which are among the chief culprits behind greenhouse gas accumulations.

The Republic of Palau, a chain of more than 200 mostly low-lying islands in the Pacific Ocean roughly 500 miles east of the Philippines, has contracted with the private Australian oil and gas firm Palau Pacific Exploration (PPX) to explore a 1-million-acre concession in that country's territorial waters. PPX is now trying to attract investors to the project.

The tract to be initially explored is found in the waters of Palau's Kayangel state, located on the northern edge of the 300-mile long archipelago. PPX officials say the area is likely home to one of the world's largest oil fields.

"Very solid research was conducted that shows there could be 1 billion barrels or more," said Alex Stanczyk, an investor relations official at Houston-based Anglo Securities Ltd., a firm hired to help PPX attract financing for the project.

Palau has a population of less than 21,000 and a per capita gross domestic product of roughly $8,000, according to 2008 estimates by the CIA's "World Factbook." Only nine of its 200-plus islands are inhabited.

The efforts to develop the possible oil and gas reserves come just as Palau is partnering with other island states to sound the alarm on global warming and the threat that rising sea levels pose to them. Low-lying Pacific and Caribbean nations fear that greenhouse gas-induced sea level rise from melting ice will erode their shorelines, damage freshwater supplies and possibly inundate all or parts of their land entirely.

Palau is also part of an ongoing but largely failing effort to get the U.N. Security Council to put climate change on its full-time agenda. Its representatives say that elevating global warming's status to a security threat will push nations to do more to curb greenhouse gas pollution and help the small island states survive.

"Never before in all history has the disappearance of whole nations been such a real possibility," Palau's vice president, Elias Camsek Chin, told U.N. member states at the most recent General Assembly opening debate. "Palau and the members of the Pacific Islands Forum are deeply concerned about the growing threat which climate change poses not only to our sustainable development, but in fact, to our future survival."

Drilling begins later this year

If drilling proves successful, the resources would become a huge boon to the economy and finances of the tiny Pacific island nation, where fishing, small-scale agriculture and tourism are now the primary mainstays. A 1998 independent survey by the petroleum industry consultant H.J. Gruy and Associates found two potential oil reservoirs near Palau with estimated production lifespans of 20 years or more.

PPX says it controls a 75 percent working interest in the million-acre North Block in Palau's territorial sea. The potentially rich hydrocarbon prospect is found under 130 feet of water at a drilling depth of about 5,000 feet, putting the project about on par with conventional offshore production, and making it not nearly as technically difficult as deepwater exploration would be.

Palau and its private partner hope to set to work on a drilling program later this year, when the company has contracted to deploy a newly constructed drill ship. Under an agreement with the government, the company has until 2010 to drill two test wells.

"PPX is inviting investors to participate in a limited portion of the drilling program in an attempt to prove the existence of hydrocarbons in quantities that could potentially equal those of world-class giant oil fields," the company said in a recent release. "PPX and its shareholders will hold a 66% Net Revenue Interest."

The Alliance of Small Island States has frequently found itself at odds with the major petroleum exporting nations at U.N. discussions on climate change, including its latest drive to gain greater Security Council recognition of the problem.

Palau government officials didn't respond directly to requests for information on their oil and gas project or for comment on its global warming implications, but instead referred E&E to the Web site of the country's oil and gas task force.

The site includes a link to an executive order by the president directing the task force to study "the possible impact of hydrocarbons in the Republic's territory and the impact of oil exploration and production on the Palauan environment, economy and community." The task force site also mentions that Palau received assistance for the project from both the World Bank and the Asian Development Bank.

The country could prove an attractive investment climate to oil companies, as it enjoys close ties to the U.S. government under a compact of free association and has U.S. military protection. The country gained full independence from the U.S.-administered U.N. Trust Territory for the Pacific in 1994 and uses the U.S. dollar as its national currency.

On May 8 this year, Palau filed a submission to the U.N. Commission on the Limits of the Continental Shelf requesting recognition of its claim of control to additional seabed stretching 350 nautical miles from its shoreline. If its claim is approved, the nation will be free to exploit oil, natural gas, minerals and other surface and subsurface resources that may be found there.