PXP prepared to resume oil exploration in Recto Bank

PXP Energy Corp. chairman Manuel Pangilinan said Wednesday the signing of a memorandum of understanding between the Philippines and China on cooperation on oil and gas development will boost the local oil and liquefied natural gas industries.

“The signing of MOU with China is a small but significant step, [in terms of the] the impact [it will] have on the LNG sector and our goal of achieving energy security from domestic resources in the country today,” Pangilinan said in a speech during the Meralco Technology and Innovation Summit.

The Philippines and China agreed to cooperate on oil and gas development during the state visit of Chinese President Xi Jinping.

Energy Secretary Alfonso Cusi said the MOU was crafted to find ways for the country to benefit from the resource-filled waters in the West Philippine Sea.

Xi said that they would continue to manage “contentious issues and promote maritime cooperation through friendly consultation” in the disputed waterways.

“I do hope that this could lead to some positive steps that we can take in respect of the work program that the group presented to the previous government in respect of the exploration and development work,” Pangilinan said.

PXP Energy, which through 79-percent controlled Forum Energy Ltd., controls Service Contract 72 (Recto Bank) and SC 75 (Northwest Palawan). 

Both service contracts are under force majeure because of the territorial dispute with China. 

“The impact on downstream activities, on the planned gas terminal, possibly LNG gas plants and Meralco [Manila Electric Co.] itself, I think in the medium term, is quite significant. I congratulate the president and [Foreign Affairs] Secretary Ted Locsin for the small but significant step,” Pangilinan said.

Pangilinan said he was hoping that a bilateral agreement between the Philippines and China would be signed soon and pave the way for oil and gas exploration in  the West Philippine Sea. 

“I do hope that something is concluded soon so that purely from the point of view of PXP Energy, so that we could start talking to CNOOC [China National Offshore Oil Corp.] and start our work program for SC 72,” Pangilinan said.

He said the moratorium would likely be lifted after the bilateral agreement was signed.

“Because you know Malampaya is rumored to be soon to be depleted…The sooner we start work [on SC 72], the better because it takes a while to develop a gas field,” he said.

He said that if SC 72 was proven to contain commercial quantities of gas, PXP Energy could sell the gas to the LNG joint venture of CNOOC and Phoenix Petroleum Philippines.

PXP Energy will acquire up to a 49-percent interest in the planned liquefied natural gas project of Phoenix as part of the subscription agreement with Dennison Holdings Corp.

Phoenix and Dennison are companies owned by Davao-based businessman Dennis Uy. Phoenix has teamed up with CNOOC to put up the country’s first LNG hub. 

“If SC 72 is eventually proven to contain gas, we could supply gas to the gas terminal and to his gas plant, that’s the only motivation,” Pangilinan said.

Pangilinan said PXP Energy decided to team up with Phoenix because of Uy’s connections with CNOOC. 

“Given that Dennis has signified an intention and desire to be part of PXP Energy in respect with SC 72, this would be a logical step for us to co-invest with him on the gas terminal and gas plant but there is no commitment at this stage,” he said.

“It is basically an option for us to take 49 percent of what he might own eventually of the terminal or gas plant,” Pangilinan said.

Topics: PXP Energy Corp. , Manuel Pangilinan , Meralco Technology and Innovation Summit , Alfonso Cusi
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