DOE allows work to resume in WPS; China joint dev’t up

Private firms with service contracts in the West Philippine Sea received “resume-to-work” notices from the Department of Energy on Monday, after President Rodrigo Duterte lifted a moratorium on oil and gas exploration in the area and China said it had reached a "consensus" with the Philippines in working in the disputed waterway.

PXP Energy Corp. said it received on Monday the notice from the DOE in relation to its operating interest in Service Contract 72 in northwest Palawan, while PXP’s subsidiary, Forum Energy Ltd. also received its notice for its operating interest in SC 75 (Recto Bank).

Energy Secretary Alfonso Cusi confirmed the development in a briefing at Malacanang as he stressed that the joint exploration with China in the waterway "does not weaken our position in the arbitral decision nor does it give away our sovereign rights."

He welcomed the statement of China's foreign ministry on Friday that the two countries can work together to jointly develop the oil and gas potential of the West Philippines Sea.

“I just read a statement from their (China) foreign secretary and they said they are sure and are hoping both countries will work together for the joint development of the West Philippines Sea,” Cusi said in an interview with ANC.

Last Friday, Chinese Foreign Ministry ministry spokesman Zhao Lijian told a daily briefing: "China and the Philippines have reached consensus on the joint development of oil and gas resources in the South China Sea and have established a cooperation mechanism for relevant consultations."

This happened shortly after Duterte announced the lifting of the moratorium imposed since 2014.

Meanwhile, the Philippine Navy chief said troops are now being deployed to the retired Nido and Matinloc gas platforms, which can be converted into littoral monitoring stations to watch over the Recto Bank and the Malampaya gas field and platform.

"I would like to add also we have inspected the Nido platform and also the Matinloc platforms in the West Philippine Sea (WPS) and we are putting Navy personnel in that area and also the Area Command (is) putting their personnel there and initially, we (will) develop that into littoral monitoring station(s)," Vice Admiral Giovanni Carlo Bacordo said in a virtual briefing.

Bacordo also said the Navy is ready to protect Philippine vessels conducting oil exploration or conducting surveys "in our areas within the 200-nautical mile Exclusive Economic Zone, within the 350-nautical mile Extended Continental Shelf in the Benham Rise."

Cusi said there are five petroleum exploration service contracts affected by the moratorium who can now resume operations namely SC 72, SC 75, SC 54 and 58 of Nido Petroleum Ltd. and SC 59 of state-owned PNOC Exploration Corp.

“We have given them the letter, the authority to resume the exploration work at the West Philippine Sea. For Forum, SC 72 they are looking a joint venture partner to pursue their activities at the West Philippine Sea and I guess all the other service contract holders are looking for a partner,” Cusi said.

He said PNOC EC is looking for a possible partner for joint development of its exploration projects.

“This lifting of moratorium is unilateral on our part, giving them (service contractors) authority with regard to any joint venture that they are pursuing so its unilateral from our part,” the energy chief said.

Cusi said there is a memorandum of understanding with China to pursue joint development at the West Philippine Sea, which government is still pursuing.

Cusi also confirmed talks with between the Philippines and China, and Forum and the China National Offshore Corp. (CNOOC) but PXP Energy said “the parties are yet to agree on any disclosable definitive agreement.”

“What we really wanted to achieve is we tap the resources, whatever resources there are at the West Philippine sea so that our people... can improve their standard of living,” he said.

He added that pursuing joint development did not affect the country’s sovereignty or its victory before the Permanent Court of Arbitration.

"This lifting of moratorium is exercising our sovereign rights. In no way does it weaken the arbitral decision,” Cusi said in a separate virtual interview with Palace reporters.

Cusi also said these service contracts have a potential undiscovered gas around 7,000 billion cubic feet and about 6,000 million barrels of potential oil.

Cusi said the service contractors are given five to six years, depending on their approved work program to explore for oil and gas in their respective contract areas.

“We are looking at from the time they start now we are looking at five years before we can really sea the fruit of that exploration,” he said.

Meanwhile, Cusi said DOE is evaluating this sale of Shell Philippines Exploration B.V.’s 45 percent stake in the Malamapaya gas project in northwest Palawan.

“In the event there will be an agreement to anyone of them they have to submit it to the consortium where the members of the consortium have the right to match. So the present other two members of the consortium have the right to match the offer,” he said.

The other members of the consortium are Udenna Corp. with 45 percent and PNOC EC with 10 percent.

“On the part of the DOE, we are evaluating this because it’s’ a bit complicated. We know that the service contract with the government is expiring 2024 and they are applying for an extension of that contract and here comes Shell selling their rights, [so] we are still in the stage of evaluating,” Cusi said.

Topics: PXP Energy Corp , West Philippine Sea , Rodrigo Duterte , China , Shell Philippines Exploration , Alfonso Cusi
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