The Energy Department rejected the request of Philex Petroleum Corp. to lift the moratorium on service contract 72 and SC 75 following the recent favorable ruling of the international tribunal in The Netherlands over the Philippines’ territorial dispute with China.
“The moratorium stays. We’re exploring ways to resolve the conflict peacefully and we follow the lead of the president,” Energy spokesman Felix William Fuentebella told reporters.
Fuentebella said the moratorium also stays in other service contract areas covered by the territorial dispute.
Philex Petroleum, the oil and gas subsidiary of Philex Mining Corp., said Wednesday it sent a letter to Energy Secretary Alfonso Cusi requesting for a meeting to discuss the forward plans in the service contracts of the company and subsidiary Forum Energy plc. in view of the UN Arbitral Tribunal’s decision.
Exploration activities were suspended in the service contracts of Philex Petroleum in December 2014 and Forum Energy in 2015, because of the maritime dispute between the Philippines and China.
SC 72 covers an 8,800-square-kilometer area west off Palawan and is estimated to contain prospective resources of as much as 16.6 trillion cubic feet of gas and 416 million barrels of oil.
Philex Petroleum controls majority of Forum Energy, which owns a 70-percent stake in SC 72, viewed as rich in petroleum reserves located at the Recto Bank in the West Philippine Sea.
Cusi earlier said the department could not immediately lift the moratorium over exploratory drillings in the West Philippine Sea because the government needed time to study the decision.
“Not so fast. We still need to study the decision and its implications,” Cusi said.
“We will still be evaluating what would be our actions in relation to the decision,” the energy chief said.
Cusi said the Foreign Affairs Department together with other government agencies concerned would thoroughly study the verdict of the Permanent Court of Arbitration under Annex VII of the 1982 United Nations Convention on the Law of the Sea on the arbitration proceedings initiated by the Philippines with regard to maritime entitlements in the South China Sea.
“The DFA will be assessing the over-all implications of the verdict in coordination with other agencies of the government among them the Department of Energy,” Cusi said.
“The Philippines reiterates its abiding commitment to pursue a peaceful resolution of disputes in the South China Sea and promote peace and stability in the region through diplomacy and consultations,” Cusi said.
The Energy Department granted a force majeure to Forum Energy on SC 72 due to the ongoing territorial dispute with China even as the company has already spent around P1 billion for pre-development activities.
Aside from SC 72, the department granted Philex Petroleum a force majeure on SC 75 in offshore northwest Palawan after the company sought for clarification as the area is also located near SC 72 (Recto Bank) and SC 58 n northwest Palawan.
Nido Petroleum Corp. of Australia and PNOC Exploration Corp. also sought suspension of their work program under service contract 58 in offshore northwest Palawan due to the dispute with China.
Nido said it was in the last quarter of 2014 that it obtained approval from the department to place the service contract “into a period of suspension pending outcome of arbitration proceedings between the Philippines and the People’s Republic of China over the ownership of the West Philippine Sea where SC 58 is located.”
SC 58 is a deep water acreage covering an area of 13,440 sq km west of SC 57 and service contract 38 or the Malampaya gas field in the offshore northwest Palawan.
