PH resumes search for oil in disputed waters

The Philippines lifted a nearly six-year moratorium on oil exploration in the Western Philippine Sea to support a 2018 memorandum of understanding (MOU) with China to cooperate on resource development in the disputed waters, the secretary said on Friday. of Energy, Alfonso Cusi.

“This unilateral action is done in good faith, not to nullify or undermine the MOU,” he said.

Cusi announced Thursday night that President Duterte had approved the Department of Energy (DOE) recommendation to lift the suspension of development work in the waters of the province of Palawan, particularly in areas covered by the Petroleum Service Contract. (SC) Nos. 59, 72 and 75.

Legal obligation

“We need to explore in order to address the country’s energy security,” he said in a statement.

“Lifting the suspension places service contractors under a legal obligation to put capital into contract areas and hire Filipino engineers and technical workers to resume exploration,” Cusi said.

When asked when such activities would resume, Cusi told reporters at a virtual press conference on Friday that he was not yet aware of any programs.

SC 59 is operated by the state-owned Philippine National Oil Co.-Exploration Corp. SC 72 and SC 75 are owned by PXP Energy Corp, led by Manuel Pangilinan.

Due to the maritime dispute with China, the DOE under Aquino’s administration declared force majeure (the moratorium on activities) in these areas as early as December 2014.

Maritime expert Jay Batongbacal said the signal for oil exploration was a “legal development” to enforce the country’s rights in the Western Philippine Sea, as affirmed by the 2016 international arbitral tribunal ruling in favor of the Philippines. , which invalidated China’s extensive claims on the South China Sea.

Exclusive rights

“It is an exercise of exclusive sovereign rights, so you can consider it an implementation of the arbitration award,” he said in a telephone interview with Inquirer.

“No. 2, it has been long delayed because the moratorium should have been lifted shortly after the arbitration award was rendered,” Batongbacal said.

He said that delaying oil exploration in the Western Philippine Sea was a “deal for China.”

But with the decision to resume the search for oil and gas “it seems that the accommodation has ended,” said Batongbacal, director of the Institute of Maritime Affairs and Law of the Sea at the University of the Philippines.

However, he warned that there is a risk that China will prevent the Philippines from exploring its own seas, given that China took “tough measures” against Vietnam for the same reason.

Batongbacal also said the timing to end the moratorium was “out of place.” Because it is monsoon season and several storms are expected to hit the Philippines, exploration could begin in late November at the earliest.

“The next thing to consider is whether Philex will go ahead and whether the Philippines will allocate resources, the Navy or the Coast Guard to protect the activity,” he said.

Philex Mining is the parent company of PXP.

Cusi said contractors need not worry about their safety when they resume work.

He said the Philippines had declared a “safety and protection zone with a radius of 500 meters around the structures and the exploration work area”, to be executed by the Philippine Navy.

“I am sure that China will respect our actions,” the energy chief said.

He cited recent assurances from a Chinese government spokesman who said Beijing believed that members of the Association of Southeast Asian Nations “will continue to work with China to … make this region an oasis of peace and a promising land of peace. development, and bring more stability and inject more positive energy to regional and global development. ”

In Beijing, Foreign Ministry spokesman Zhao Lijian said in a daily briefing on Friday that China looked forward to working together with the Philippines on joint development of energy projects in the South China Sea.

Agreements

Presidential spokesman Harry Roque said the search for oil and natural gas in the Western Philippine Sea could now continue amid friendly ties between the Philippines and China.

The oil exploration memorandum of understanding was one of more than two dozen agreements signed during Chinese President Xi Jinping’s visit to the country in November 2018.

Details of the MOU were not disclosed. Cusi said then that the MOU was “just a cooperation to explore solutions” on “how we can enjoy the resources” in the South China Sea.

SC 59 is located southwest of Palawan, while SC 75 is northwest of the province. SC 72 is on Recto (Reed) Bank.

Within SC 72 there is a block where the Sampaguita natural gas prospect is located. Sampaguita could be the next big gas discovery after Malampaya.

Forum Energy, an affiliate of PXP, reported about a decade ago that, according to a 2006 study, the Sampaguita field had a potential of up to 566 billion cubic meters of natural gas, more than five times the initial estimate.

Potential sources

According to Undersecretary of Energy Leonido Pulido III, the affected licensees are expected to invest an estimated $ 25 million in investments with the force majeure lifting and a total of $ 78 million for the total remaining period of the work commitment program of your service contracts.

Senator Sherwin Gatchalian, chair of the Senate energy committee, welcomed the president’s decision as Malampaya’s gas was being reduced.

“It will bode well to ensure that the country has enough energy if there are potential sources within the EEZ. [exclusive economic zone], which could secure our power supply for years to come, ”Gatchalian said in a statement.

Malampaya accounts for 20 percent of the country’s electricity supply and almost 30 percent for Luzon, he said.

The service contracts “could be new sources of oil and gas that can ensure, if not contribute to, stabilize the country’s energy supply,” Gatchalian said.

“This could also open up the area to potential investors under the Philippine Conventional Power Procurement Program, which is designed primarily to attract investors to explore indigenous energy resources,” he said.

Former Foreign Secretary Albert del Rosario, critical of the president’s stance towards the actions of China and Beijing in the Western Philippine Sea, praised Duterte’s decision, calling it “a constructive measure.”

“As long as we carry out activities with China in accordance with Philippine law, this would be a step in the right direction towards a peaceful settlement of disputes,” Del Rosario said.

The Recto Bank is located about 200 kilometers west of Palawan, within the 370 km EEZ of the Philippines, where the country claims exclusive rights to explore and exploit its resources.

In August 2014, two Chinese hydrographic research vessels were sighted near Recto Bank.

It was not clear how long the Chinese ships stayed in the area, but Manila interpreted their presence as Beijing’s first provocative act since it rejected the Philippine proposal to freeze activities that intensify tensions at sea.

The presence of the ships came more than a year after the Philippines filed a case with the international arbitral tribunal challenging China’s claims over almost the entire South China Sea.

Beijing permit

In March 2011, two Chinese gunboats sailed too close to a ship it was inspecting at Recto Bank for oil and gas, forcing the Philippine military to send planes and boats to scare them away.

The Department of Foreign Affairs maintains that the Philippines has exclusive sovereign rights over Recto Bank, as it is part of the continental shelf of the Philippine archipelago under the United Nations Convention on the Law of the Sea.

However, the Chinese Foreign Ministry insisted on its claims about the area and that exploration there required a permit from Beijing. —WITH REPORTS FROM LEILA B. SALAVERRIA, MARLON RAMOS ,, INQUIRER RESEARCH AND REUTERS

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