Manila, Beijing seen to agree on joint exploration, PXP shares rise

MANILA – (UPDATE) The Philippines and China are likely to agree on joint exploration in the South China Sea, as the two countries set aside a bitter sea dispute to foster economic cooperation, a member of President Rodrigo Duterte’s business delegation to Beijing said Wednesday.

Filipino businessmen are in a “festive mood” with millions of dollars worth of deals expected to be signed during Duterte’s four-day state visit to China, said Henry Lim, CEO of hybrid rice producer SL Agritech.

Shares of PXP Energy Corp., which has a license to explore for oil and gas in Recto Bank (Reed Bank), were up 12.62 percent to P4.55 in early trading on Wednesday.

“With the direction of the President, I think it should be certain,” Lim told ANC’s “Market Edge with Cathy Yang,” when asked if a joint exploration deal could be reached.

“As long as we don’t talk about sovereignty and we let the next generation talk about this problem. What we are going to talk right now is joint exploration, joint interest and that is going to be good for both countries,” he said.

Duterte’s visit that started late Tuesday is seen to signal a thaw in relations between Manila and Beijing, which have been locked for years in a dispute over reefs and outcrops in the resource-rich South China Sea.

In July, a United Nations-backed arbitration court ruled in favor of a protest filed by Duterte’s predecessor, Benigno Aquino III, and said that China had no historic rights to the South China Sea.

The arbitration ruling could raise questions on the legality of a joint exploration, said economist Calixto Chikiamco.

"I think it would be best for govt not to pursue joint exploration because it will be contentious... We have to ensure any agreement does not compromise our sovereignty," he told ABS-CBN News.

Past attempts by rival claimants to jointly explore the waters have failed. The Supreme Court declared as unconstitutional the 2005 Joint Marine Seismic Undertaking (JMSU) between the Philippines, China and Vietnam.

Talks for joint exploration between PXP Energy Corp., then named Philex Petroleum, and China National Offshore Oil Corp. (CNOOC) under Aquino failed to produce an agreement on joint exploration in Reed Bank. -- with reports from Warren de Guzman, ABS-CBN News