MVP urged to finalize talks with Chinese oil producer

By Iris C. Gonzales, The Philippine Star

Posted at Jan 10 2014 08:02 AM | Updated as of Jan 10 2014 04:02 PM

MANILA - Energy Secretary Carlos Jericho Petilla is urging the group led by business titan Manuel V. Pangilinan to enter into commercial arrangements with China’s state-owned oil producer to finally pave the way for exploratory works at the disputed Recto Bank in the West Philippine Sea.

This, as Petilla said one permanent solution to soaring electricity prices is to drill more oil and gas fields to lessen the country’s dependence on the Malampaya gas field in offshore Palawan.

Electricity prices soared last year with the record increase in the generation charge of Manila Electric Co. (Meralco), the country’s biggest power distributor, of P3.44 per kilowatt-hour.

“The permanent solution is to drill again but we can only do that if we have a clear signal from the DND (Department of National Defense),” Petilla said.

As such, he said he is urging private investors such as Pangilinan’s group to enter into commercial arrangements among themselves.

“That is why I am asking the private sector to see if there can be commercial arrangement among themselves while respecting the service contract terms of the Philippines,” Petilla said.

Pangilinan led Forum Energy has a 70-percent stake in the Recto Bank, which is covered by Service Contract 72.

The area is estimated to contain prospective resources of as much as 16.6 trillion cubic feet of gas and 416 million barrels of oil.

Monte Oro Resources and Energy Inc. holds the remaining 30-percent stake in the contract.

The Department of Energy has granted Forum Energy an extension to August 2015 to complete the second sub-phase obligations of drilling wells on SC 72.

Forum sought an extension in the government-mandated work program because of delays in their drilling activities, dragged largely by the geopolitical issues between the Philippines and China

Philex Mining owns 64.45 percent of Forum Energy through its interests in FEC Resources, Inc. and Philex Petroleum Corp.

Petilla said he is urging not just the group of Pangilinan but other private investors whose contracts may be in affected territories.

In October, Pangilinan said Forum Energy is in fresh talks with China’s state-owned oil producer China National Offshore Oil Co. Ltd. (CNOOC to hopefully pave the way for exploratory works in the disputed area.

“That’s what we’re aiming for. We hope to do that to reach a commercial basis for further exploratory and drilling work on the concession but further subject to approval of their government and our government,” Pangilinan earlier said.