Develop oil contracts first before joint exploration – Cusi

MANILA, Philippines – Not keen on joint exploration for oil and gas prospects with China, Energy Secretary Alfonso Cusi wants all suspended service contracts in the West Philippine Sea to be developed by project proponents first.

The Energy chief said he wants all awarded service contracts under moratorium to start development before discussing any possibility of undertaking any joint exploration in the disputed waters.

“Personally, (I’m) hoping not for the joint exploration. But I’m hoping that the suspended exploration (projects), the service contracts that we have already awarded…be continued first before anything else,” Cusi said.

Hopes that oil and gas exploration projects located in the disputed waters could finally move forward surfaced following President Duterte’s recent trip to China.

However, Cusi said the moratorium, until now, stays until the conflict over ownership is clarified.

“It’s DFA (Department of Foreign Affairs) taking the lead in diplomatic talks,” he said.

Both countries have agreed that consultations and negotiations will be done peacefully between “sovereign states directly concerned” and that “no activities will be conducted in the disputed waters so as not to “complicate or escalate disputes and affect peace and stability.”

In August 2012, the energy department issued a moratorium on all exploration and drilling works in the West Philippine Sea amid the rising tension with China due to territorial disputes.

The projects under moratorium include Service Contract 72 covering the 8,800-square kilometer Recto Bank, which is estimated to have as much as 16.6 trillion cubic feet of gas and 416 million barrels of oil.

The prospect is operated by Forum Energy Plc, which is controlled by PXP Energy Corp. of the Pangilinan Group.

Service Contract 75, another PXP Energy-controlled project, was also on force majeure since it is located northwest off Palawan, near Service Contract 72.

Australian oil and gas firm Nido Petroleum Ltd. and PNOC Exploration Corp. also suspended their work program under Service Contract 58 in 2014 pending the outcome of arbitration proceedings between the Philippines and China over the ownership of West Philippine Sea.

The project covers an area of 13,440 square kilometers west of the Malampaya gas field in northwest Palawan.