As territorial dispute heightens: Talks between MVP Group, China oil firm stalled

MANILA, Philippines - Talks between the group of businessman Manuel V. Pangilinan and state-run China National Offshore Oil Co (CNOOC) for possible exploratory works at the disputed Recto Bank in the West Philippine Sea have stalled, Pangilinan said.

“We have not heard from them in a few months,” Pangilinan told reporters on the sidelines of Luminaries 2014, the annual awards ceremony of Manila Electric Co. (Meralco) held to honor some of its customers.

“The communication just died down,” he said when asked if both parties agreed to temporarily halt negotiations. He explained while there has been no agreement yet, their discussions simply died down.

Asked if his group would revive the talks, he said there are no plans.

 â€œWe don’t know. For the moment, there are no plans. We are busy with some other matters,” Pangilinan.

Talks started last year with the aim of reaching a commercial basis for further exploratory and drilling work on the concession but subject to approval of both governments.

The two parties opted to talk on their own amid an ongoing territorial dispute between the Philippines and China covering the Recto Bank.

Pangilinan’s Forum Energy holds a 70 percent stake in Service Contract 72, which covers Recto Bank.

Energy Secretary Carlos Jericho Petilla has said that one permanent solution to soaring electricity prices is to drill more oil and gas fields to lessen the country’s dependence on the Malampaya gas field in offshore Palawan.

Electricity prices soared last year with the record increase in the generation charge of Meralco, the country’s biggest power distributor, of P3.44 per kilowatt-hour.

The Recto Bank area is estimated to contain prospective resources of as much as 16.6 trillion cubic feet of gas and 416 million barrels of oil.

Monte Oro Resources and Energy Inc. holds the remaining 30 percent stake in the contract.

The Department of Energy has granted Forum Energy an extension to August 2015 to complete the second sub-phase obligations of drilling wells on SC 72.

The department has extended Forum’s work program by two years to August 2015 from the original deadline of August 2013 to allow it to complete its obligations under the service contract.

Forum sought an extension in the government-mandated work program because of delays in their drilling activities, dragged largely by the geopolitical issues between the Philippines and China.

Philex Mining owns 64.45 percent of Forum Energy through its interests in FEC Resources, Inc. and Philex Petroleum Corp.