Filipino contractors in West PH Sea seen to yield oil exploration results in 5-6 years – Cusi

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Metro Manila (CNN Philippines, October 19) — Filipino firms searching the West Philippine Sea for oil deposits are expected to yield results in the next five to six years, the Department of Energy said Monday.

Energy Secretary Alfonso Cusi said the time is ticking for service contractors after President Rodrigo Duterte lifted the years-long ban for oil exploration activities in the disputed waters, which have been declared part of the Philippines' exclusive economic zone.

"Regarding the timeline, we have given notice to the five service contract holders to resume their exploration activities. Under that notice, nandoon ang kanilang work at investment commitments, [their work and investment commitments are there]" the DOE chief said during a Malacañang briefing.

"Doon sa work program, I think they have five to six years lined up. They should resume that immediately because time will be against them kapag hindi sila nagtrabaho agad [if they don't start working right away]."

He said the companies are required to pour in as much as $80 million (about ₱3.9 billion) in capital to search for oil, which should also help economic recovery and create jobs.

Cusi said there are five companies, including Malaysian partners, who hold service contracts in these disputed waters. He added that three other applicants are under evaluation for oil exploration and possible drilling activities.

'Mutual respect' with China

DOE expressed optimism oil exploration can progress smoothly despite the Philippine government's sole decision to open up the area amid ongoing negotiations with China for a joint effort.

"Kung manggugulo naman ang Tsina because of our unilateral lifting of our moratorium, unang-una, hindi naman bawal, walang regulasyon na nagbabawal (sa) unilateral lifting," Cusi said.

RELATED: China looks forward to 'new progress' in oil exploration deal with PH

"Pangalawa, ang ating relasyon ng Pilipinas at Tsina, nag-improve na po 'yan since President Duterte came into power. It has reached a new maturity – mahusay po, it is based on mutual respect," he added.

[Translation: Will China will make trouble because of our unilateral lifting of our moratorium? In the first place, there is no regulation against a unilateral lifting. Secondly, our the Philippines' relations with China have improved since President Duterte came into power. It has reached a new maturity – it is good, it is based on mutual respect]

Any issues or protests that may arise can be resolved "diplomatically," Cusi added, noting that mechanisms are in place for redress. He added that talks are ongoing for the joint exploration deal, which were halted due to the COVID-19 pandemic.

RELATED: PH, China members of joint oil exploration committee revealed

China has made several incursions into the Philippines' 200-nautical mile exclusive economic zone in the past few years, which has resulted in the filing of diplomatic protests against Beijing. China continues to reject Manila's arbitral win, with Duterte and Chinese President Xi Jinping opting to set aside the issues and to "agree to disagree" for the time being.

Businessman Manny Pangilinan's PXP Energy holds a service contract in Recto Bank, but exploration was put on hold by a 2012 order that froze all such activities in disputed areas.

READ: Gov't thumbs down PXP bid to take over Malampaya

More investments seen

Duterte's latest move paves the way for the resumption of drilling activities in the disputed waters, including the planned joint exploration with China.

The area is said to be rich in oil deposits, and is the subject of a July 2016 arbitral tribunal ruling that dismissed Beijing's sweeping claims in the South China Sea.

Cusi expects the relaxed rules on oil exploration to usher in more investments and ensure long-term energy security, with the country in search of an alternative source of energy as the Malampaya natural gas facility is seen running dry in the next few years.

Malampaya supports up to 30% of the country's electricity needs.

Separately, Cusi said businessman Dennis Uy's Udenna Corporation, as well as the state-owned Philippine National Oil Company-Exploration Corporation hold the right to match Shell Exploration B.V.'s plan to offer its 45% stake in the gas-to-power project as it looks to divest and leave the consortium. This means existing partners can be prioritized to buy Shell's shares over an outsider.

RELATED: Dennis Uy, MVP eyeing oil exploration deals in West Philippine Sea