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Lifting exploration ban won’t affect China deal — energy chief

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Malampaya Gas Field

A government decision to resume exploration activities in the South China Sea will not affect its non-binding deal with China to jointly explore gas and oil resources, the country’s energy chief said on Friday.

The unilateral decision was done in good faith and was unlikely to affect joint oil development discussions with China, Energy Secretary Alfonso G. Cusi told an online news briefing. Both countries signed a memo to jointly explore the disputed area two years ago.

“There is no problem with the joint development or the memorandum of understanding that we signed with China,” he said. “It will even help the MOU expedite explorations.”

President Rodrigo R. Duterte on Thursday lifted the moratorium on exploration works in the heavily contested waters. His predecessor Benigno S.C. Aquino III enforced the moratorium in 2014 amid rising tensions between the Philippines and China.

There was no need for the country to inform China about the lifting of the ban, Mr. Cusi said. “I’m sure China will respect our decision.”

But in case China protests, the Philippines must “stand up” for its sovereign and economic rights, he added.

The Philippines in 2016 won an arbitration case against China after a United Nations tribunal rejected China’s historical claim to more than 80% of the South China Sea based on a nine-dash line map.

Manuel V. Pangilinan-led PXP Energy Corp. and state-led Philippine National Oil Co.-Exploration Corp. operate petroleum prospects under so-called service contracts 75 and 59, respectively.

Forum Energy, Ltd., where PXP Energy also has a majority stake, was also allowed to return to its areas under service contract 72. The company is still in talks with China National Oil Offshore Corp. (CNOOC) for a future partnership at Recto Bank, which is projected to bear as much as 3 trillion cubic feet of gas resources.

PXP shares jumped by 49.9% to close at P7.72 each on Friday.

“The lifting of the suspension places the service contractors under legal obligation to put capital into the contract areas and hire Filipino engineers and technical workers to resume exploration,” Mr. Cusi said in a statement on Thursday.

He added that the government had placed military posts around the areas as a security precaution.

The depleting reserves in the country’s sole natural gas reservoir in Malampaya, northwest of Palawan province, prompted Mr. Cusi to advise the President to allow the resumption of gas and oil exploration in the contested waters.

“With the impending depletion of our natural gas reserve in Malampaya, it is the department’s position that there is an urgent imperative to resume exploration, development, and production activities within our exclusive economic zone to ensure continuity of supply of indigenous resources in the country,” he said on Thursday.

The Malampaya gas-to-power project is expected to be depleted by 2027, according to estimates by the Energy department. — Adam J. Ang

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