Pangilinan-led PXP Energy Corporation has revived talks with a prospective Chinese partner on its targeted oil and gas exploration venture at Recto Bank, a petroleum block deemed to be part of the disputed territory in the West Philippine Sea.

PXP Energy Chairman Manuel V. Pangilinan, nevertheless, indicated that they would want to be comprehensively guided if they could be set free from the government-to-government (G2G) deal between the Philippines and China in case they would decide to pursue with their work program at the block ahead of any agreement between the two countries.

“We don’t have the authority on the sovereignty issues. We’re walking on egg shells, because if you talk about sovereignty – that’s them (Philippine and Chinese governments) and we have to respect that,” he stressed.

Pangilinan stated that the resuscitated discussion was with a Chinese state-owned enterprise (SOE), not necessarily China National Offshore Oil Corporation (CNOOC), that it has been previously tapping as a partner for the Recto Bank upstream petroleum investment.

At this stage, however, he acknowledged that “we cannot do anything, especially with the Chinese” adding that the stalemate has to be broken first before any breakthrough could be reached by the parties.

He conveyed that in the discussion with the Chinese firm two months ago, one of the questions raised had been on the 60:40 royalty sharing arrangement for oil and gas exploration ventures in the Philippines; and how the income tax payment of the contractor shall be treated.

To recall, PXP Energy had started tapping contractors for its targeted seismic survey and eventual drilling program for its petroleum blocks in Northwest Palawan basin around April this year, but that was subsequently stopped by government due to ‘unresolved concerns’ in the West Philippine Sea.

On account of that development, the Department of Energy (DOE) has affirmed the "force majeure declaration" resorted to by the company after its seismic and planned drilling activities had been stalled by the lingering diplomatic skirmish between the two countries.

Apart from Recto Bank which is under Service Contract 72, the other upstream venture of PXP Energy covered in the force majeure declaration had been its Service Contract 75 which is also in Palawan basin.

The development of the Recto Bank prospect is one of the long-desired goals of the Pangilinan group because that is seen to have the potential to match the scale of resources of the Malampaya field.