The Department of Energy (DOE) has conveyed to Congress that President Ferdinand Marcos Jr. has given the go-signal to oil and gas exploration and drilling activities in the country, including at the disputed waters of the West Philippine Sea (WPS).

When quizzed by Representative France Castro during a Congressional budget briefing if the Philippines will pursue oil and gas drilling at the WPS despite despite China’s intensifying aggression, Energy Secretary Raphael P.M. Lotilla responded in the affirmative.

“Yes, the go signal from the President in his State of the Nation Address is that: we will pursue exploration in the other areas of the country and that includes those within the territorial waters, contiguous zones and exclusive economic zone of the Philippines,” he expounded.

The energy chief qualified though that the timing will largely depend on the reports to be submitted by the petroleum service contractors, including that of state-owned Philippine National Oil Company-Exploration Corporation (PNOC-EC), which is also eyeing prospects along blocks straddling territories of conflict.

The Recto Bank (also known as the Reed Bank), which is covered by Service Contract 72 previously issued by the DOE, is the major gas exploration prospect that is being placed in the middle of a menacing diplomatic strife in the WPS.

Until now, the government is stalled at an "indecision phase" on a moratorium imposed on Recto Bank’s service contractor PXP Energy Corporation, primarily due to the unresolved territorial claims’ with China.

Energy Undersecretary Alessandro O. Sales said that “since (PXP Energy) took over in early 2000s, the latest significant activity that was taken out in the field was the 3D seismic data acquisition in 2012. And unfortunately, due to events, more substantial activities out in the Reed Bank had not materialized as of yet.”

He reiterated that initial drillings carried out in the 1980s at Reed Bank’s Sampaguita well “turned out to be positive for gas, but because of the uncertainties in the previous administration, that posed moratorium on (its) activities.”

To recall, PXP Energy already contracted and deployed shipping vessels for its targeted extended seismic survey even as it also sought the government’s imprimatur for planned drilling of two wells (based on its submitted work program to the DOE). However, its activities were suddenly stopped April last year by the past Duterte administration due to the lingering diplomatic tension with China.

The ensuing development was the enforcement of an "exploration moratorium," but there is no clear indication yet when that will be lifted by the current government leadership.

The Philippines has been lagging behind Southeast Asian peers when it comes to extracting indigenous oil and gas resources - as neighboring-countries like Indonesia, Malaysia, Thailand and Vietnam have been successful in transforming their state-owned oil companies as ‘petroleum powerhouse’ not just in the region, but also on the broader global sphere.

Even Vietnam has struggles of strained relations with China, but its government leaders have been clever in employing a strategy that still enabled them to pursue exploration and production (E&) ventures, while not also giving up on their territorial claims.

Apart from foreign relations skirmish with China, the Philippine upstream sector is also afflicted with other major challenges – including low prospectivity and weak data on offered blocks to investors; as well as the unresolved case on the income tax treatment for service contractors that is still pending with the Supreme Court.