Duterte lifts moratorium on oil exploration in West Philippine Sea

Published October 16, 2020, 12:40 PM

by Myrna M. Velasco

To allow the entry of investors in the upstream petroleum sector, primarily China National Offshore Oil Corporation (CNOOC), President Rodrigo Duterte has already lifted the moratorium on seismic as well as oil and gas drilling activities at the West Philippine Sea (WPS), a disputed territory.

Energy Secretary Alfonso G. Cusi (Photo credit: https://www.doe.gov.ph)

Energy Secretary Alfonso G. Cusi announced to the media that the President “has approved the recommendation of the Department of Energy (DOE) to lift the suspension of petroleum activities and the resumption of petroleum exploration in the WPS.”

With the lifting of the moratorium, he noted the immediate companies that will benefit from it will be CNOOC, the Udenna Energy Corporation of Davao businessman Dennis Uy, state-run Philippine National Oil Company-Exploration Corporation (PNOC-EC) as well as PXP Energy of businessman Manuel V. Pangilinan.

“We need to explore, so we may address the country’s energy security,” Cusi said; while emphasizing that “the lifting of the moratorium was arrived at in good faith and with full regard to the ongoing negotiations between the Philippines and China, and Forum Ltd. and CNOOC.”

In fact, it was Pangilinan-led’s PXP Energy which formally pleaded to the DOE on the lifting of the exploration moratorium way back in 2018, but it took nearly two years for the government – primarily Malacanang, to act on it.

With this relaxed policy, CNOOC’s long planned partnership with PNOC-EC at Service Contract (SC) 57 within the northwest Palawan basin, can already advance; as well as the tie-up of PNOC-EC with Spanish firm Repsol for SC 59 for a petroleum block in Southwest Palawan.

Uy’s Udenna is considerably a ‘new entrant’ in oil ad gas exploration ventures in the country, and it just recently won bids for two areas to do seismic and exploration activities at the West Philippine Sea.

For the Pangilinan group, it is targeting to resume extended seismic survey and well drilling at the Recto Bank, a block known to be endowed with rich gas deposits that could potentially match the commercial scale production at Malampaya.

Cus indicated “resume-to-work notices (were) issued by the DOE to the service contractors doing petroleum-related activities in areas of SC 59, 72 and 75 in the West Philippine Sea.”

The energy chief qualified that the seismic and exploration activities were suspended since 2013, on the ground of force majeure, because of the persisting diplomatic tension between the Philippines and China at WPS.

Cusi admitted that this policy enforcement is partly anchored on the country’s edgy disposition because of the near-term resource exhaustion of the Malampaya field; as well as the expiration of its service contract in 2024.

“With the impending depletion of our natural gas reserves in Malampaya, it is the department’s position that there is an urgent imperative to resume exploration, development and production activities within our EEZ (exclusive economic zone) to ensure continuity of supply of indigenous resources in the country,” the DOE secretary said.