MVP: Atmosphere for new CNOOC talks is better

PXP Energy Corp. is hoping that positive developments in the country’s relationship with China will “in due course” lead to the resumption of talks with China National Offshore Oil Corp. (CNOOC) to jointly explore an area in the South China Sea for natural gas.

“The atmosphere is better because the President (Rodrigo R. Duterte) has taken a constructive approach towards relationship with China,” PXP Energy Chairman Manuel V. Pangilinan told reporters on the sidelines of Manila Electric Co.’s quarterly briefing on Monday.

“The atmosphere for reopening, reviving discussions with CNOOC is there because the President, this government, has taken a more constructive view of China and our relation with China, which I think is a more positive thing,” said Mr. Pangilinan, who also chairs Meralco. “Siguro (Maybe) we’ll just have to wait.”

Asked whether PXP Energy would initiate the resumption of talks, Mr. Pangilinan said: “I would say that I think we just have to wait for things to settle down a bit and see where it goes.”

“But I’m optimistic that something will develop in due course, because... we’re starting to worry about Malampaya,” he said. “I think it will start to get depleted by 2024.”

Forum Energy Ltd., a 67.19% directly and indirectly owned subsidiary of PXP Energy, has been awaiting guidance from the government on the future activity in the disputed area in West Philippine Sea.

At stake is service contract (SC) 72, which is covered by the decision handed down by the Permanent Court of Arbitration in The Hague in the Netherlands on July 12, 2016.

The court ruled that Reed Bank, where SC 72 lies, is within the Philippines’ exclusive economic zone as defined under United Nations Convention on the Law of the Sea.

On March 2, 2015, the Department of Energy (DoE) placed SC 72 under force majeure because the contract area falls within the disputed area, which was the subject of the arbitration process.

Under the terms of the force majeure, exploration work at SC 72 is suspended from Dec. 15, 2014 until the DoE notifies Forum Energy that it may continue drilling.

SC 72 is located offshore west of Palawan and covers 8,800 square kilometers and contains the Sampaguita gas discovery.

The Malampaya gas field began production in 2001. Its reserves is expected to start running by around 2022 to 2024. The natural gas project, offshore of northwest Palawan, delivers up to 20% of the country’s electricity requirements. —