THE DEPARTMENT of ENERGY (DoE) is recommending to the Department of Foreign Affairs (DFA) the end of the suspension of exploration in a disputed South China Sea area covered by Service Contract (72), after PXP Energy Corp. — the company with the biggest stake in the project — submitted its request to pursue its work program, Energy officials said on Thursday.
Asked by reporters if the DoE has acted on PXP’s request, Ismael U. Ocampo, assistant director of the DoE’s Energy Resource Development Bureau, told reporters “Alam ko na i-forward na,” explaining that “kailangan dadaan… sa DFA” (As far as I know the DoE has forwarded PXP’s request to the DFA).
Asked separately what prompted the DoE to endorse to the DFA the lifting of the suspension on gas exploration in the disputed waters, Undersecretary Felix William B. Fuentebella said: “We have to explore some more.”
SC 72 is covered by the decision handed down by the Permanent Court of Arbitration in The Hague, the Netherlands on July 12, 2016. Reed Bank or Recto Bank, where SC 72 is located, lies within the Philippines’ exclusive economic zone as defined under United Nations Convention on the Law of the Sea. The arbitration court struck down Beijing’s vague historical basis for preventing the Philippines from exploring for and exploiting resources in that area of the South China Sea.
On March 2, 2015, the government placed SC 72 under force majeure because the contract area lies within the disputed area, which was the subject of arbitration. Under that status, exploration work at SC 72 is suspended from Dec. 15, 2014 until the government lifts such suspension.
On Dec. 21, 2018, Forum (GSEC 101) Ltd., or Forum GSEC, sent a letter of request to the DoE for the government to end suspension of work in the area.
Forum Energy Ltd., in which PXP Energy holds a 78.98% direct and indirect interest, has a 70% interest in SC 72 located northwest of Palawan, through its wholly owned subsidiary Forum GSEC.
PXP Energy has a total economic interest of 53.1% in SC 72.
Mr. Fuentebella said that the DoE’s “explore, explore, explore” campaign is necessary since the country lags behind its neighbors in terms of number of exploration projects.
“… [S]a Philippines, we have only five (exploration projects),” he said.
“We are number one in energy sustainability, but in the other factors — in access [to energy] and affordability — hindi mataas ang ranking natin (our ranking is not high).”
In terms of energy security, which he said factors in use of indigenous energy sources and reliance on imported fuel, the country has not been faring well either.
Mr. Fuentebella said these are among the reasons why the country needs to pursue more exploration projects. — Victor V. Saulon

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