Joint exploration pact lapses

The controversial joint marine seismic undertaking (JMSU) between the Philippines, China and Vietnam has ended, according to Energy Secretary Angelo Reyes.

“That JMSU has lapsed and has not been extended,” Reyes told reporters when asked about the status of the inter-agency meeting that is supposed to be held to discuss the JMSU, which expired last July 1.

Reyes said the committee is studying the lapse and the full ramifications of the agreement.

The Philippine government has created a special committee that will recommend if the country should renew or extend the memorandum of understanding (MOU) with China and Vietnam under a three-year JMSU.

The Philippine National Oil Co.-Exploration Corp., a gas and oil exploration unit of the state-owned PNOC, had signed the MOU in July 2005 with its counterparts in China and Vietnam.

PNOC-EC entered into a tripartite agreement with China National Offshore Oil Corp. and PetroVietnam to explore a portion of the South China Sea, including the disputed Spratly Islands, on March 14, 2005 but the project only started on July 1, 2005.

In signing the agreement, the head of the PNOC then believed that this could be a big step towards transforming a previous area of conflict into an area of possible cooperation and mutual benefit.

Critics of the Arroyo administration said the JMSU undermines the country’s sovereignty and violated the Constitution when foreigners, particularly Chinese explorers, were allowed to conduct seismic tests in Philippine territorial waters.

Then PNOC president Eduardo Mañalac said the agreement was designed to be scientific in nature.

Based on the terms of the JMSU, the three countries will be allowed to do exploratory work involving three activities such as data gathering, processing, and interpretation.

Under the agreement, China was assigned to gather the seismic data while Vietnam will process the information and the Philippines will conduct the interpretation.

PNOC-EC, CNOOC and PetroVietnam started the second phase of the joint study in December 2007, which will assess the petroleum potentials of certain areas in the South China Sea.

The first phase of the seismic survey started on Sept. 1 and ended on Nov. 16, 2005 with a total coverage of 11,021.65 line kilometers.

The Philippine government has pushed for the realization of the agreement in the interest of building and maintaining peace, stability, security and prosperity in the contested areas in the South China Sea.

PNOC president Antonio Cailao earlier said that the agreement with China and Vietnam is not new to the company, citing that it had previously engaged in similar contracts with foreign companies.

Sources said that in the last PNOC board meeting, the issue was not discussed.

“On JMSU, that’s being held in abeyance. With the controversies, we are not moving. We will just wait for the decision of the Energy Department and the national government within this month,” said PNOC-EC chairman Jacinto Paras. 

The decision on whether to extend the JMSU is crucial especially for Forum Energy PLC, which is optimistic that it could bag one contract in the Sampaguita prospects in offshore Palawan once the tri-partite agreement expires.

In a statement, Forum Energy chairman Alan Henderson also expressed confidence that it could convert its geophysical survey and exploration contract (GSEC) 101 into a Service Contract (SC) after the JMSU signed by the Philippines with China and Vietnam is completed.

“Whilst the process of conversion has taken some time, the company is informed, and believes, that a positive outcome will be reached in a relatively short timeframe,” Henderson said.

Forum Energy’s GSEC 101 contract has been under negotiation since May 2007 for conversion to an SC.

The existence of the JMSU apparently affected the application for conversion of Forum Energy.