Energy department awaits go-ahead on oil drilling in West Philippine Sea

The Department of Energy (DOE) is ready to resume drilling for oil and natural gas on Recto Bank in the West Philippine Sea, but when work will restart is up to the Department of Foreign Affairs (DFA), which suspended the exploration in 2014 as the Philippines pursued international arbitration to resolve a territorial dispute with China.

“[There is no ‘go’ yet from the DFA, but [a new] contracting round will push through,” Energy Undersecretary Felix William Fuentebella said in an interview on Thursday.

Award process

Fuentebella was referring to the sixth installment of the DOE-administered Philippine Energy Contracting Rounds (PECR), which the DOE intends to carry out this year.

The PECR is a process through which the DOE awards service contracts for the exploration and development of various energy resources, including oil.

During the fifth PECR, the DOE offered contracts for 11 sites, including Area 7 of Recto Bank, which has an estimated resource potential of 165 million barrels of oil and 10.5 trillion cubic meters of natural gas.

The available resource at the Malampaya project is less at 8.1 trillion cu m of natural gas.

The DOE said Malampaya, which provides fuel to major power plants in Luzon, might run out of gas by 2024.

“The instruction of Secretary (Alfonso) Cusi is that the DOE should be able to assure those who will conduct the activities of their safety,” he said.

“If the DOE says go for it, then it’s a go with the assurance that [doing so] will be safe,” he added.

Ismael Ocampo, director at the DOE’s Resource Development Bureau, told reporters on Wednesday that the agency expected the suspension to be lifted in December.

He said a directive from the DFA directing the DOE to resume oil and gas exploration in the South China Sea was already in the works.

No comment was immediately available from the DFA on Wednesday.

Territorial dispute

China, which claims almost all of the South China Sea, claims Recto Bank, known internationally as Reed Bank.

A survey ship contracted by Forum Energy Ltd.,  an affiliate of PXP Energy Corp., formerly Philex Petroleum Corp., was reportedly almost rammed by Chinese patrol vessels.

In 2014, the DOE suspended exploration on Recto Bank as the administration of then President Benigno Aquino III challenged China’s claim to nearly all of the South China Sea in the UN-backed Permanent Court of Arbitration in The Hague.

On July 12 last year, the tribunal ruled in favor of the Philippines, invalidating China’s extensive claim and saying Beijing had violated Manila’s sovereign rights to fish and explore for resources in the West Philippine Sea.

Recto Bank is in the West Philippine Sea, waters within the Philippines’ 370-kilometer exclusive economic zone in the South China Sea.

Mending relations

After coming to office last year, however, President Duterte refused to pressure China to accept the arbitral ruling, preferring to mend relations with Beijing that had been frayed by the arbitration case.

In May, former Speaker Jose de Venecia, speaking at a business forum in Beijing, called for joint exploration and development in the Spratlys, a group of resource-rich islands in the middle of the South China Sea.

But Sen. Alan Peter Cayetano, then Mr. Duterte’s foreign secretary-designate, said De Venecia, the DFA special envoy for intercultural dialogue, was only speaking in his personal capacity.

President Duterte was also in Beijing at the time, attending the new Silk Road conference sponsored by China for international cooperation.

Mr. Duterte assured Chinese President Xi Jinping during a bilateral meeting that the Philippines would seek a peaceful resolution of Manila’s territorial dispute with Beijing in the South China Sea.

As recently as March, however, Philex group chair Manuel V. Pangilinan expressed his desire to continue work at Recto Bank.

Forum holds Service Contract No. 72, which covers a block of Recto Bank where the Sampaguita natural gas prospect is located.

According to the DOE, the estimated resource potential of the Reed Bank Basin is as much as 60 trillion cu m of natural gas.