PXP Energy Corp. needs to make a formal request to the energy department to lift the moratorium on exploration and drilling works in Recto Bank under Service Contract (SC) 72, Energy Secretary Alfonso G. Cusi said on Tuesday.
“It’s not us that will operate there. You should tell us, write us,” Cusi told PXP Energy President Daniel Stephen Carlos on the sidelines of the 2018 Energy Investment Forum.
Carlos approached Cusi after the energy secretary delivered his speech. He asked the Department of Energy official for an update of the moratorium, which the DOE issued in December 2014, amid rising maritime tension with China then.
PXP Energy holds a 78.98-percent controlling interest in UK-based Forum Energy Plc., which, in turn, has a 70-percent stake in SC 72, an oil-and-gas-exploration permit covering the Sampaguita natural-gas prospect in the Reed Bank, to the west of Palawan.
Carlos said he would have to report to the PXP board about Cusi’s comments.
“We were waiting for instructions from the DOE since they imposed the moratorium. But if Cusi says it should come from us, then we will request to lift the force majeure. I will tell Mr. Pangilinan,” the PXP official said.
Manuel Pangilinan is the chairman of PXP.
Pangilinan is hoping the memorandum of understanding (MoU) between the Philippines and China for the joint exploration in the South China Sea “could lead to some positive steps that we can take in respect of the work program that the group presented to the previous administration in respect of the exploration and development work.”
Carlos said PXP has yet to be advised by the government on its next step following the MOU signing.
“The next step is for them to form steering committees. Below that, there will be working groups under the MOU. On the part of China, CNOOC [China National Offshore Oil Corp.] is the designated company and for us it’s the Philippine National Oil Co. and the existing service contractors. In the case of SC 72, that’s us. We will talk with CNOOC on that.”
Once the moratorium is lifted, PXP will proceed to drill two wells in a period of 20 months at an estimated cost of $60 million. He hopes that exploration activities under SC 72 will yield positive results.
“We are focused on the upstream sector,” said Carlos when asked if exploration and drilling activities in SC 72 is dependent on the possible entry of Pangilinan’s Group into the liquefied natural gas (LNG) project of Phoenix Petroleum Corp.
Phoenix Petroleum Philippines Inc. is granting preferential rights to PXP Energy to participate and acquire up to a 49-percent equity in the former’s project to build an LNG terminal and a gas-fired power plant with Chinese partner CNOOC.
PXP and CNOOC used to discuss a possible joint exploration of SC 72 to develop a part of the Reed Bank. However, talks did not prosper then after the Philippine government declared force majeure.
Lectura, L. (December 5, 2018). ‘PXP must formally ask DOE to lift SC 72 moratorium’. Business Mirror. Retrieved from https://businessmirror.com.ph/pxp-must-formally-ask-doe-to-lift-sc-72-moratorium/