DOE defers to DFA after UN verdict

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Department of Energy (DOE) Secretary Alfonso Cusi said on Wednesday that the Department of Foreign Affairs (DFA) would lead concerned government agencies in assessing the favorable verdict of the UN Permanent Court of Arbitration on the West Philippine Sea (South China Sea).

“The DFA will be assessing the over-all implications of the verdict in coordination with other agencies of the government, among them the Department of Energy,” Cusi said.

“The Philippines reiterates its abiding commitment to pursue a peaceful resolution of disputes in the South China Sea and promote peace and stability in the region through diplomacy and consultations,” new energy chief said.

China and the Philippines have overlapping claims over the Spratly archipelago, a resource-rich South China Sea chain, as well as over nearby shoals, reefs and banks and their adjacent waters.


The Spratlys are also claimed in whole or in part by Brunei, Malaysia, Taiwan and Vietnam.

In 2012, Former DOE Secretary Zenaida Y Monsada, who was DOE Director for Oil Industry Management Bureau (OIMB), said that the West Philippine Sea from Northern Luzon, all the way to Palawan, particularly the hotly contested Scarborough Shoal, are potential areas for oil exploration.

The Aquino Administration as early of 2011 offered many blocks for exploration and development to interested multi-national companies with the capacity to drill oil offshore.

The DOE under Aquino offered a total of 15 exploration contracts, mostly offshore prospects off the western island of Palawan.

DOE did not give details beyond saying the blocks would include East Palawan—an undersea section of the West Philippine Sea—as well as Northwest Palawan and the Sulu Sea basins.

“The contracting round is expected to attract investments in oil and gas exploration activities which will contribute to the realization of the country’s energy self-sufficiency level target of 60 percent,” DOE said at the time.

“Independent and large-scale international exploration companies… have already expressed their interest to tender their bid in the various blocks,” it added.

But in March last year DOE suspended all drilling and exploration works in the West Philippine Sea, particularly in the area covered by Service Contract (SC) 72 in the Reed Bank, citing a force majeure as the site is the subject a territorial dispute between the Philippines and China.

Philex Petroleum Corp. has a substantial stake in SC 72, as does Monte Oro Resources and Energy Inc., according to previous filings of Philex Petroleum with the Philippine Stock Exchange.

Philex Petroleum holds a 60.49 percent interest in Forum Energy – which operates SC 72 in Reed Bank – also called Recto Bank, covering the Sampaguita Gas Field as well as several oil and gas leads. In turn Forum Energy has a 70-percent stake in SC 72.

Territorial disputes between the Philippines and China have hampered Forum Energy’s plan to drill at least two more appraisal wells in Reed Bank. The Philippine government issued the SC 72 exploration permit in 2010.

In 2012, Forum Energy said 3D seismic surveys performed by independent consultant Count Geophysics Ltd. in 2006 showed the gas in place is about 21 percent more than the reserves in nearby Malampaya.

Monsada said these areas in West Philippine Sea are where Nido and Malampaya had successful undertaking of oil and natural gas exploration.

“But the Malampaya extracted oil had so far extracted contained some metals that cannot be processed by local refineries, so it was sent abroad where they have bigger refineries, for processing,” she said.

On the other hand, the natural gas from Malampaya is now being harnessed by three power plants in the country, in addition to 40 buses plying from Batangas to Metro Manila and vice versa.

“Hopefully, we can find more oil from our territories in order to reduce our importation of oil from other countries,” Monsada said.

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