IMPROVING relations between China and the Philippines have bolstered prospects for a joint exploration in the South China Sea despite still-unresolved maritime disputes, BMI Research said.
“We believe improving bilateral ties between the two countries increases the chances of a joint-exploration in the disputed waters,” the Fitch-owned company said in a report released on Tuesday.
It cited a greater scope for cooperation between Beijing and Manila as a result of the conciliatory approach adopted by President Rodrigo Duterte towards China.
“A breakthrough in the longstanding maritime stalemate could allow PXP Energy Corp. to resume drilling in service contract 72, which holds the Sampaguita gas discovery,” BMI said.
The natural gas field is believed to contain up to 4.6 trillion cubic feet of natural gas and 115 million barrels of crude oil.
But exploration in the most promising parts of the disputed areas, “especially those in the South China Sea (West Philippine Sea) have achieved limited progress to date,” BMI said.
Last week, Energy Secretary Alfonso Cusi told reporters that the Energy and Foreign Affairs departments were still working on a “win-win” solution to the issue of an existing moratorium on oil and gas exploration in contested waters.
BMI noted that “Finding new oil and gas sources remain crucial for the Philippines as its sole producing Malampaya gas and condensates field enters the end of its production cycle. With no new significant projects in the pipeline, the Philippines’ need to explore for additional oil and gas is clear.”
Located off Palawan, the Malampaya gas-to-power project, jointly owned by Shell Philippines Exploration BV, Chevron Malampaya LLC, and PNOC Exploration Corp., is expected to be depleted by 2024.
Better ties between China and the Philippines could give the DoE’s new coal and oil contracting round a much needed lift, BMI also noted
However, the success of the contracting round hinges on whether the country is able to diffuse geopolitical risks in the area.