Pangilinan: Oil project in S.China Sea needs China or US support

By Rosemarie Francisco, Reuters

Posted at Jan 17 2013 08:45 PM | Updated as of Jan 18 2013 04:47 AM

MANILA - The Philippine company holding a contract to explore for oil and gas in disputed waters in the South China Sea said on Thursday the project's success hinged on either joint exploration with China or U.S. support if the country took on the venture alone.

Forum Energy Plc, whose majority shareholder is linked to top miner Philex Mining Corp , has had talks with Chinese state-owned offshore oil producer CNOOC on joint exploration. But those talks are clouded by competing Chinese and Philippine territorial claims to large swathes of the South China Sea.

Philex Mining's chairman Manuel Pangilinan answers media queries during a forum with the Foreign Correspondents Association of the Philippines at a hotel in Makati, January 17, 2013. Photo by Cheryl Ravelo, Reuters

Philex Mining's chairman, Manuel Pangilinan, said there was a danger that the gas field on the Reed Bank off the western Philippine province of Palawan will never be developed.

"It is a very practical question and I guess a moral question as well: Are you prepared to set aside, but not surrender, your claim on sovereignty over the area, so you could go on and develop the area jointly?" Pangilinan told a forum hosted by the country's foreign correspondents association.

"Or should you stick to the moral position that this is ours and no matter what happens this is ours? In which case, quite likely it will never get developed, at least not in our lifetime."

Any bid by the Philippines, with its limited military capability, to develop the area on its own would require U.S. naval backing, he said.

"That is why my question to the U.S. is: "Will you send your navy to protect our vessel? Or let us know, do you, as a matter of policy...prefer a commercial arrangement that will still the waters in the West Philippine Sea?", he said.

The government has awarded a contract to Forum for exploring in the Sampaguita gas field, or SC 72, on Reed Bank. Reserves in the area are likely to exceed 2006 estimates of up to 20 trillion cubic feet of natural gas, Forum Energy said in April.


Disputes over sovereignty have flared up in recent months. China lays claim to virtually all the South China Sea while the Philippines and four other countries - Brunei, Malaysia, Taiwan and Malaysia - claim certain parts.

Two Chinese vessels threatened to ram a survey ship contracted by Forum in the Reed Bank area in March 2011.

The United States and the Philippines, long-time allies in the Asia-Pacific region, have stepped up military cooperation in terms of training and maritime security operations as Washington announced plans to increase its focus on the region.

The Philippines has said it will only agree to a partnership between Forum Energy and a Chinese company if the Chinese side agrees to abide by Philippine law, a position restated last week by Foreign Affairs Secretary Alberto del Rosario.

Chinese officials, including its ambassador in Manila, Ma Keqing, favour a joint venture between the two countries.

Pangilinan said plans to deploy a survey vessel to Reed Bank last October with a view to establishing an oil rig in the Sampaguita gas field in March or April this year were dropped in view of continued patrols by Chinese vessels.

Pangilinan said Forum Energy, in which Philex Petroleum Corp owns more than two-thirds, had not resumed talks with CNOOC on a joint venture, even though it had been approached by other possible partners, including U.S. firms.

"The principal focus of our discussion at this time is with CNOOC and with CNOOC alone. We're not engaged with any discussion with other party," he said.  (Additional reporting by Manny Mogato)