Cusi to re-initiate ‘joint oil exploration’ talks with China

Published December 18, 2018, 12:00 AM

by manilabulletin_admin

By Myrna M. Velasco

Following the signing of a memorandum of understanding during the November visit of Chinese President Xi Jinping, Energy Secretary Alfonso G. Cusi has started knocking at the door of his counterpart Chinese official so they can flesh out terms on the proposed joint oil exploration at ‘conflict areas’ within the West Philippine Sea.

Energy Secretary Alfonso G. Cusi (Source:
Energy Secretary Alfonso G. Cusi (Source:

Cusi told reporters that he already started communicating with China’s National Energy Commission, which is the counterpart agency of the Philippines’ Department of Energy.

“We had just rolled out our intent to start the discussion on the MOU, so we’re still waiting for their (China’s) reply,” he said.

The start of discussions at the negotiating table, he said, is a timeframe that he cannot ascertain yet – because that is a matter that the relevant parties must agree on if China will respond positively to his correspondence.

Cusi’s department is targeting a timeline of one year for both countries to cement a legally binding framework that could guide joint oil and gas exploration activities at the diplomatically saddled basins in the country.

The energy department indicated that there are several companies eyeing to explore in the West Philippine Sea – including PXP Energy of the Pangilinan group and even state-run Philippine National Oil Company-Exploration Corporation.

Nevertheless, Philippine government officials from Malacañang to the Departments of Foreign Affairs and Energy deemed it a touch too sensitive pursuing seismic surveys and petroleum drilling activities without first resolving the country’s diplomatic tussle with China.

For a starting point, Cusi sounded off that the stance of the Philippine government is to sustain the provision of Presidential Decree 87 or the Philippine Oil and Gas Law when it comes to propounded royalty sharing if drilling of oil or gas with China turns out commercially viable.

In such discussion with China, Cusi indicated that the country’s sovereignty concern shall not be compromised – hence, the tenor of the proposed joint oil exploration deal shall be hinged on viable commercial terms.

But the energy chief said they are looking at ways of improving the incentive scheme, such as how other countries had done it, primarily on cost recovery mechanisms since oil and gas exploration had always been regarded a high risk business.

One country that the Philippines has been referencing to is Indonesia – having the most mature E&P industry the rest of Southeast Asian region.