Pangilinan eyes resumption of talks with CNOOC

PXP ENERGY Corp. sent feelers to China National Offshore Oil Corp. (CNOOC) for a possible resumption of talks about jointly exploring the contested area in the South China Sea or the West Philippine Sea, the chairman of the local company said on Monday.

“I believe we have sent feelers to CNOOC to see whether we could meet with them again as soon as they are available to talk about the South China Sea situation. Of course, anything with them will have to be cleared with our government. I’m sure it’s true for their side as well,” PXP Chairman Manuel V. Pangilinan told reporters on the sidelines of the quarterly briefing of Manila Electric Co., a company he also chairs.

Asked if the feelers were sent recently, he replied: “Not this year.”

Mr. Pangilinan said there had been some suggestions on the legal framework for the Philippines and China on joint exploration, and that the local group had hired legal experts to clarify the sovereignty issue and to help come up with a “legal structure.”

“I think there have been some suggestions. We have engaged both local lawyers… and international lawyers to help us craft a legal structure that obviously will meet the test of sovereignty of the Philippine government and what these lawyers think might be acceptable to the Chinese government,” Mr. Pangilinan

PXP Energy directly and indirectly owns 77.5% of Forum Energy Ltd., a London-listed company whose main asset is a controlling interest in offshore exploration Service Contract (SC) 72 west of Palawan island in the disputed seas. SC 72 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.

Mr. Pangilinan said the Philippine government had not set a timeframe for coming up the legal structure.

“I think a great deal of it will depend on the timeframe by which the Philippine government and the government could agree a protocol, a code of conduct for the joint or cooperative surveys, development etcetera of the South China Sea,” he said.

Mr. Pangilinan said PXP Energy and CNOOC had been waiting for the two governments “to sort things out between the two of them,” although they appeared to be “moving positively in arriving at something.”

“From what we gathered, it’s a positive development,” he said, citing the recent visit of President Rodrigo R. Duterte to China to attend an economic forum, during which he met with Xi Jinping, China’s president.

Mr. Pangilinan also said the recent pronouncement of Mr. Duterte favoring a 60-40 sharing of the gas find in the area would be the government’s call.

“But at the end of the day, the proportion of sharing are numbers that the government will tell us what’s acceptable to them,” he said.

“If he’s happy with 60-40 then we’ll take it as marching orders,” he added.