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PHL won’t give up arbitral win over joint exploration

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PRESIDENT Rodrigo R. Duterte approved on Oct. 15 the Department of Energy’s recommendation to lift the ban on exploration activities in the West Philippine Sea. — BLOOMBERG

THE Philippines maintained it will not set aside its arbitral win against China over disputed areas in the West Philippine Sea just to proceed with joint oil and gas development, the country’s energy chief said on Monday.

Two years ago, the Philippines and China signed a memorandum of understanding (MoU) to pursue petroleum resources in the contested waters, which the Department of Energy (DoE) estimates to bear as much as seven trillion cubic feet of gas and six billion barrels of oil.

While they may jointly develop oil and gas prospects in the area, “there is no such condition” of setting aside the 2015 ruling of the Permanent Court of Arbitration favoring the Philippines in its control of the West Philippine Sea, according to Energy Secretary Alfonso G. Cusi.

“In pursuit of possible joint development, hindi natin sinasama ang ating (we are not laying down our) sovereignty or dropping the arbitration position,” he said in an interview with ANC. “Hindi po natin sine-set aside ’yun; tuloy-tuloy po ang ating discussion on pursuing that MoU (We are not setting aside that; we still continue discussing the goals of the agreement).”

President Rodrigo R. Duterte approved on Oct. 15 the DoE’s recommendation to lift the ban on exploration activities in the West Philippine Sea, which was imposed by his predecessor in 2014 amid the escalating tension between the two countries.

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The department has sent work resumption notices to the developers of five petroleum prospects within the area. These include state-led Philippine National Oil Co.-Exploration Corp. (PNOC-EC), which operates under Service Contract (SC) 59, and Nido Petroleum Philippines Pty. Ltd. (SC 54 and 58).

Two firms led by Manuel V. Pangilinan, PXP Energy Corp. and its subsidiary Forum Energy Ltd., through Forum (GSEC 101) Ltd., were also allowed to resume petroleum-related activities in their respective areas under SC 75 and 72.

Mr. Cusi, speaking in a separate briefing, assured the lifting of the exploration ban, which is an exercise of the country’s sovereign rights, in no way weakens the country’s win in the international arbitration case.

The Energy chief also saw no “adverse reaction” from China’s statement over the country’s unilateral decision to resume exploration.

“We hope the two sides will work together for new progress in the joint exploration,” China’s Foreign Affairs spokesman Zhao Lijian said in a press conference last week.

Forum Energy and China National Oil Offshore Corp. (CNOOC) continue to negotiate to implement the two countries’ non-binding deal. In a disclosure to the stock exchange, PXP Energy said the two companies have “yet to agree on any disclosable definitive agreement.”

Shares in PXP Energy have surged since Friday, hitting the 50% ceiling for daily price movements two days in a row. PXP shares closed at P11.58 a piece on Monday, double Thursday’s closing price of P5.15.

The threat to energy security posed by the depleting natural gas resources in Malampaya, northwest of Palawan, prompted the DoE to seek the resumption of the stalled exploration activities in the disputed waters.

“There is an urgent imperative to resume exploration, development, and production activities within our EEZ (exclusive economic zone) to ensure continuity of supply of indigenous resources in the country,” the DoE said on Thursday.

Based on estimates, the Malampaya gas field is expected to completely dry out by 2027. The gas reservoir generated 3,200 megawatts of electricity, accounting for 21.1% of the Philippines’ gross power generation in 2019.

The field’s operator, Shell Philippines Exploration B.V. recently disclosed it is selling its 45% operating stake in the Malampaya gas-to-power project under SC 38 in part of its rationalization efforts during the pandemic. — Adam J. Ang

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