The Department of Energy (DOE) has categorically declared that "no deal" was firmed up with the Chinese government on any joint oil and gas exploration activities at the disputed West Philippine Sea, including the Recto Bank which is reckoned as a gas-rich domain of the Philippines.
Energy Secretary Raphael P. M. Lotilla stated that the only arrangement clinched during President Ferdinand R. Marcos Jr.'s visit to China is to “resume talks” on prospective oil and gas exploration ventures with China, similar to what happened in the Duterte administration; although it just ended up in a deadlock after six years.
“The agreement was to resume negotiations or to resume talks, so we do not have any agreement on moving forward yet with the actual carrying out of activities in the Recto Bank,” the energy chief stressed.
The Recto Bank is a geological play seen to have massive gas resource potential – and the main block under Service Contract 72 has been deemed to have prospective gas find that could match or even surpass the output of the Malampaya field.
Given the fact that there had been "no deal" with China at this time on collaborative upstream investments in the disputed territory, it is manifest that any targeted discovery of commercial-scale gas in the Recto Bank could be held up for several years more.
Seismic activities as well as drilling plans of service contractors at the Recto Bank are still on "state of moratorium" and that arrangement extends within the wider core of the diplomatically-challenged West Philippine Sea.
In fact, the deadlock with China essentially crippled the Philippine upstream oil and gas industry for almost a decade already as no single well had been drilled in the country since then.
Lotilla reiterated that in the joint statement of Chinese President Xi Jinping and Philippine President Ferdinand Marcos Jr., what they specifically announced was a paragraph in the agreement sealed by both governments to have “oil and gas cooperation; and essentially, the statement was an agreement to resume discussions on oil and gas development.”
The DOE chief added “these discussions would be building upon the outcomes of previous talks that have been held between the two governments.”
As to the date on re-commencing the targeted talks with China, Lotilla noted “the joint statement did not go into such details and we will have to be guided by our Department of Affairs in so far as the timing and the subject matter of the resumption of talks and even the venue for those talks, so we will have to await their guidance on these things.”
In the past Duterte administration, China and the Philippines only went as far as setting up the working groups for the "targeted talks" on joint oil and gas exploration, but overall discussions have been generally stifled by Constitutional and other legal questions – primarily as to whose country’s laws and rules shall be upheld in the propounded exploration and production (E&P) investments in the West Philippine Sea.
On that particular matter, Lotilla emphasized “that’s the reason why the talks are being resumed because this will have to be discussed. Our President had agreed in principle, and of course, we cannot expect them to go into negotiating details at this particular point.”
The energy chief, nevertheless, qualified that what the initial Xi-Marcos agreement establishes is a "healthy environment for the talks to take place – that there is at highest levels of both the Philippines and Chinese government a commitment to move forward the discussions.”
To date, while the West Philippine Sea remains an "untouchable" terrain for E&P investments, Lotilla indicated “We will be proceeding with oil and gas developments in other areas of the country,” stressing further that “we will be open to foreign and domestic investors carrying out the development activities.”
He similarly recapitulated the recent pronouncement of state-run Philippine National Oil Company-Exploration Corporation (PNOC-EC), on its bid to farm-in shares on various service contracts that are currently under its charge.
“In the case of PNOC- EC, it has announced an invitation for potential farm-ins to a number of service contracts that are under the control of the PNOC-EC, so as far as those concerned, we would be able to go ahead,” Lotilla asserted.