FOREIGN AFFAIRS Secretary Teodoro L. Locsin, Jr. said the oil and gas development memorandum of understanding (MoU) between the Philippines and China calls for a joint intergovernmental committee to negotiate the terms of resource development in maritime areas.
The MoU was signed during this week’s Manila state visit of Chinese President Xi Jinping.
In an interview with CNN Philippines, Mr. Locsin, reading from a copy of the MoU, said it calls for an “intergovernmental joint steering committee” and “inter-entrepreneurial working groups.”
“The two governments will establish an intergovernmental joint steering committee, herein after referred to as the Committee, and one or more inter-entrepreneurial working groups… The committee will be responsible for negotiating and agreeing the cooperation arrangements in maritime areas to which they will apply, and deciding the number of working groups to be established and for which part of the cooperation area each working group is established,” he said.
“Each working group will negotiate and agree on inter-entrepreneurial, technical, and commercial arrangements that will apply in the relevant working area,” he added.
According to the document, the intergovernmental joint steering committee will be co-chaired by Mr. Locsin and State Councilor Wang Yi, who is also the Chinese foreign minister, and will be co-chaired by “vice ministers.”
The working groups will be composed of representatives from enterprises authorized by the two governments. China has authorized state-run China National Offshore Oil Corp. as the Chinese enterprise on the working groups. The Philippine will authorize the winners of service contracts or the Philippine National Oil Co. (PNOC).
Cooperation arrangements should be reached within 12 months of the MoU signing.
Mr. Locsin said he will release the full document once he obtains consent from China. He also said he may also furnish a copy to the Senate if requested.
Asked which Philippine companies would be included in the working groups, Mr. Locsin said he has no information on the matter. He also noted Energy Secretary Alfonso G. Cusi’s concern regarding the present moratorium on oil exploration in South China Sea amid the signing of the MoU.
“Right now, I don’t know (the Philippine companies) because there is a moratorium… But the memorandum of understanding will always be valid because this will govern how you arrive at agreements when the moratorium is lifted,” he said.
The Department of Energy (DOE) issued a moratorium on all exploration and drilling works in Service Contracts 72 and 75 in December 2014 and 2015, respectively, amid rising maritime tension with China.
Separately, Mr. Cusi said in a news conference that according to the MoU, “we have to sit down immediately and come up with our position and we should do it, if I remember it right, within a period of no more than one year.”
“That is for us to come up with ways to harness the resources or to do a joint development or a joint exploration. We have to come up with the ways, or no ways,” he said, adding that the two parties have to “put an end to that talking.”
Mr. Cusi was speaking at a Thursday news conference after the launch of a new contracting round for the country’s energy resources.
He declined to disclose the full terms of the MoU, and said: “I believe that we should just wait for the signed copy.”
“That in time will be released to make sure that we have the correct document,” he said.
On Wednesday, the chairman of PXP Energy Corp. described the MoU as “a small but significant step” in advancing the development of carbon resources in the area.
“I do hope that this could lead to some positive steps that we can take in respect of the work program that the group has presented to the previous government in respect of the exploration and development work,” said PXP Energy Corp. Chairman Manuel V. Pangilinan during a conference.
The MoU was signed days before the DoE launched the Philippine Conventional Energy Contracting Program (PCECP). The department said the program brings forward its plan to develop the petroleum exploration industry to make the country globally competitive.
“I want to emphasize the importance of this event. There is an urgency for us to explore and tap our indigenous resources. The President has said many times that it is important that we become self-sufficient,” Mr. Cusi said.
Under the PCECP, potential investors have two modes of application to pursue the 14 pre-determined areas identified by the DoE: one in Cagayan, three in east Palawan, three in the Sulu Sea, two in Agusan-Davao, one in Cotabato, and four in west Luzon. The application period is 180 days. The areas are not within the seas being contested by China and the Philippines.
Potential applicants may also nominate and publish other areas of interest at any time of the year. Their application will be subjected to a 60-day challenge period.
DoE Undersecretary Donato D. Marcos said this early, four areas in the Philippines outside the 14 pre-determined areas had been nominated by interested developers. He declined to identify the possible investors. But he said the nominated areas are in Cotabato, Quezon, Bicol and north Luzon, specifically Cagayan.
“You have to understand that it [pre-determined areas] is only six basins. We have 16 sedimentary basins in the Philippines,” he said.
He said some of the nominated areas are adjacent to those pre-determined by the DoE. — Camille A. Aguinaldo, Victor V. Saulon