THE group of Manuel V. Pangilinan (MVP) remains interested to pursue new exploration activities near the disputed Reed Bank area of the West Philippine Sea (WPS).
Pangilinan said his company remains on the lookout for other prospects aside from Service Contract (SC) 72, an oil and gas exploration permit covering the Sampaguita natural-gas prospect in the Reed Bank, to the west of Palawan.
This contract area falls within the territorial disputed area of the WPS, which is the subject of a United Nations arbitration process between the Philippines and the People’s Republic of China.
UK-based Forum Energy Plc., which has a 70-percent stake in SC 72, is 60.49-percent owned by Philex Petroleum Corp. led by Pangilinan.
In March Forum Energy received a notice of force majeure on SC 72 from the the Department of Energy (DOE). This means that all exploration work on the disputed area has been suspended.
Despite this setback, Pangilinan said his group is eyeing new exploration sites within the area. “Probably one or two [sites],” he said, while adding that these areas, “unfortunately,” are located within the contested area.
“Maybe not to choose the word ‘bothered,’ but certainly you can’t proceed with this political issue hanging. We’d like to, but if we’re not allowed to do anything, then we don’t do anything,” he said.
When sought for comment, Philex Petroleum President Carlo Pablo said SC 72 remains a key asset of Forum Energy. “All we can do for now is wait until the force majeure is lifted by the government.”
The force majeure took effect on December 14, 2014, and will take effect until the DOE notifies the company that it may commence drilling.
As a result, the second subphase of SC 72 has been put on hold until further notice. The terms of the second subphase and all subsequent subphases will be extended by the term of the force majeure,” Forum Energy said.
Pangilinan said Forum Energy will not give up the contract awarded to it by the DOE. He said the situation right now is complex, as reports indicate that China is building outposts on Philippine reefs so it can assert its claim. “Knowing that, what do we do? What are our options? Do we just accept it? Do we do something about it? I don’t know.”
Pangilinan said upstream oil and gas player Philex Petroleum would continue to incur losses.
“I don’t foresee Philex Petroleum going in the black for the next year. We just have to wait for developments on the exploration side,” he said.
“Earning asset is a small minority…production was down in the first half. Of course, crude-oil price is down for more than $100 per barrel to something like $60 average,” Pangilinan said.
Philex Petroleum, at end-June this year, incurred an P86-million consolidated net loss, more than twice the P40.7-million net loss a year earlier, noting lower output and crude prices.
“The net loss primarily resulted from lower petroleum revenues contributed by its subsidiary, Forum Energy Plc.,” the company said.
Revenues sank to P83.452 million from P195.045 million.
“The company will continue its efforts to reduce operating expenditures through the rationalization of the company’s business structure and asset portfolio, particularly in the current low oil-price environment,” the company said.