Resumption of petroleum drilling at Recto Bank pushed

Following the government’s announcement that it already terminated its joint oil exploration talks with China, the Department of Energy (DOE) indicated that Pangilinan-led PXP Energy Corporation can now proceed with its oil and gas exploration activities at the Recto Bank.

In a statement to the media, the department noted that the service contract (SC) holders, primarily the Recto Bank petroleum block, can already resume seismic survey and other exploration activities at the diplomatically-saddled West Philippine Sea.

The Recto Bank prospect is under Service Contract 72 and the other exploration activity being advanced by PXP Energy is its Service Contract 75, which straddles offshore northwest of Palawan basin.

“This encouraged our service contract (SC) holders to restart investments in WPS exploration. Specifically, SC No. 72 and SC. No. 75 contracted survey vessels to carry out exploration activities in Recto Bank,” the DOE stated.

The energy department said it will guarantee “the safety and security of our oil and gas activities in the WPS,” adding that it already “held 11 meetings and briefings with all concerned service contractors together with maritime law enforcement and security experts in the National Task Force for the West Philippine Sea.”

It was in April this year when PXP Energy contracted a vessel for the resumption of its oil and gas exploration at the Recto Bank, but it was subsequently compelled to stop on that activity due to maneuvers carried out by China.

The DOE primarily acknowledged that among the major reasons on suspended exploration activities at WPS had been “China’s harassment of the survey vessels hired by our service contractors. At that time, the negotiations with China were also cited as another reason for the suspension.”

In October 2020, the Philippine government had lifted the moratorium on petroleum exploration and drilling programs at West Philippine Sea, but investors were still not able to advance on their search for oil and gas resources in their awarded blocks because of the protracted joint oil exploration talks with the Chinese government.

Even PXP Energy had constantly sounded off its concern with the government that even if it can hire vessels to carry out extended seismic survey and prepare its block for scheduled well drillings, there had been that uncertainty on China’s meddling in the targeted venture.

Because of intrusion from China then, the Pangilinan-led firm had invoked force majeure on its programmed exploration activities at Service Contracts 72 and 75.

The company similarly specified then that it was “constrained to terminate agreements with suppliers and incurred substantial liabilities costs and penalties” because of the very hasty government order relating to its stalled exploration and drilling activities.

Malacanang previously announced that the exploration activities of PXP Energy could resume at the two petroleum blocks once it secures clearance from the Security, Justice and Peace Coordinating Council (SJPCC), a government body that has been overseeing political, diplomatic and national security concerns.

PXP Energy emphasized that it will only pursue resumption of exploration activities at Recto Bank once the State will give its final go-signal and upon lifting of its declared "force majeure" stature at its petroleum blocks.

The Recto Bank is seen as potential replacement for the Malampaya field given its gas-rich potential. Nevertheless, drilling activities have to be carried out to tangibly confirm the commercial viability of the petroleum reserves.