Wednesday, August 16, 2017

PXP Energy revives talks with Chinese counterparts



August 16, 2017 By Victor V. Saulon, Sub-Editor

PXP Energy Corp. had talks “fairly recently” with counterparts in China ahead of the lifting of a moratorium on oil exploration in the West Philippine Sea, the chairman of the company said on Monday.
Mukhang mas (It looks more) hopeful based on the statements made by the government, principally [Foreign] Sec. [Allan Peter S.] Cayetano. Hopefully we could push it forward,” PXP Energy Chairman Manuel V. Pangilinan told reporters on the sidelines of Tuesday’s signing of a joint venture between a firm that he also chairs and a local water district.
He was referring to the secretary’s pronouncements that the country would have a more open relationship with China ”that sets the more friendly context” under which the company should be able to push the discussions forward. 
He declined to say when the discussions took place or whether these were with the Chinese government or with China National Offshore Oil Corp. (CNOOC), the company that PXP Energy and its partners had initially held talks with.
“These are ongoing [talks]. It’s good to keep [these] under wraps,” Mr. Pangilinan said. “Let’s leave it at that. These are very private discussions.”
“The first step for us is, there’s a moratorium, right? So we cannot do anything in the concession area. So the first order of the day is to lift the moratorium,” he said. “But even if the moratorium is lifted, can we send our boats there and oil rig. We have to talk to the Chinese.”
He confirmed that his group had talks with Chinese counterparts, and described the tone of the discussions as “good, positive.”
Mr. Pangilinan’s comments come after the Department of Energy (DoE) said a new contracting round was planned for petroleum and coal as it hopes to create wealth for the industry to fund more energy development projects.
Last month, DoE officials said they were targeting December as the launch of the contracting round, the sixth time that the department will be holding a transparent and competitive system of awarding service contracts for petroleum and coal prospective areas. The move is hoped to result in the discovery of new energy reserves.
The department said the areas to be offered include parts of the West Philippine Sea, Sulu sea and areas around Palawan island. In the fifth round, the DoE offered 11 areas with a total scope of about 4.8 million hectares.
PXP Energy directly and indirectly owns 77.5% of Forum Energy Ltd., a London-listed company whose main asset is a controlling interest in offshore exploration Service Contract (SC) 72 west of Palawan island in the disputed seas. SC 72 is covered by the decision handed down by the Permanent Court of Arbitration in The Hague in the Netherlands on July 12, 2016.
The court ruled that Reed Bank, where SC 72 lies, is within the Philippines’ exclusive economic zone as defined under United Nations Convention on the Law of the Sea.
On March 2, 2015, the DoE placed SC 72 under force majeure because the contract area falls within the disputed area, which was the subject of the arbitration process.
Under the terms of the force majeure, exploration work at SC 72 is suspended from Dec. 15, 2014 until the DoE notifies Forum Energy that it may continue drilling. 
The Philippines is pressed to find new natural gas reserves as the Malampaya field off Palawan island is expected to begin running out by around 2022 to 2024. The natural gas project is said to deliver up to 20% of the country’s electricity requirements.

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