Petroleum firms continue talks with DoE on exploration in WPS

TALKS continue between Philippine companies holding exploration service contracts with the government and the Energy department after the termination of joint oil and gas negotiations with China, the agency said over the weekend.

The Department of Energy (DoE) said it “firmly stands for the assertion of Philippine sovereign rights through the promotion of exploration” in the West Philippine Sea (WPS).

It made the statement after outgoing Foreign Affairs Secretary Teodoro L. Locsin, Jr. announced the termination of joint oil and gas negotiations with China, as reported on Thursday.

Mr. Locsin’s announcement came after the Security, Justice, and Peace Cabinet Cluster (SJPCC) suspended in March this year all oil and gas activities in the WPS.

“Following the SJPCC’s suspension order and now with the termination of negotiations with China, the [DoE], in coordination with the SJPCC for safety and security concerns, continues to pursue talks with existing service contract holders so they can proceed with their work programs,” the Energy department said.

The DoE said it previously held meetings with the holders of Service Contract (SC) 72 and SC 75 to restart their investments in exploring oil and gas in the contested seas.

The SC 72 concession is located in the WPS, west of Palawan island and southwest of the operating Malampaya gas field. The contract was put under force majeure on Dec. 15, 2014 due to the maritime dispute with China.

SC 72 is operated by PXP Energy Corp. subsidiary Forum (GSEC 101) Ltd. with a 70% participating interest. Within the exploration block is the Sampaguita gas discovery, which is estimated to contain about 2.6 trillion cubic feet of contingent gas resources.

In October 2020, the DoE notified PXP Energy and its partners that the force majeure imposed on SC 72 had been lifted with immediate effect. The joint venture had 20 months from the date of the lifting of the suspension to drill two commitment wells.

For the DoE, the decision to lift the exploration ban “was an exercise in foresight given the current global energy crisis.”

SC 75 in northwest Palawan is operated directly by PXP Energy with a participating interest of 50%. Its partners in the exploration block are state-owned PNOC Exploration Corp. and PetroEnergy Resources Corp.

Similar to SC 72, the DoE lifted the force majeure over the block in October 2020.

The department said it had held 11 meetings and briefings with service contractors together with maritime law enforcement and security experts.

SUSPENSION OF EXPLORATION ACTIVITIES
The DoE said that among the reasons given by the SJPCC for the suspended activities starting in March this year was China’s harassment of the survey vessels hired by the service contractors.

“At that time, the negotiations with China were also cited as another reason for the suspension,” it said in the statement.

With a few days left before the end of the Duterte administration, hopes fade of a joint exploration between the Philippines and China under their 2018 memorandum of understanding on cooperation in oil and gas development.

The memorandum created the inter-governmental joint steering committee that served as the official negotiating forum between the two countries. The committee convened only once on Oct. 28, 2019 and no agreement was reached during the meeting, the DoE said.

The Energy department said that “it has always strongly believed in the value of negotiating with China and other claimant-countries such as Vietnam.” — Victor V. Saulon