THE Department of Energy (DOE) has approved the immediate suspension of all exploration work at the oil-rich Service Contract 75 (SC75) in the Northwest Palawan Basin.
In a disclosure to the Philippine Stock Exchange (PSE) on Thursday, Manny Pangilinan-led Philex Petroleum Corp. said the DOE has granted a force majeure on SC75.
Under the terms of the force majeure, all exploration work at SC75 shall be immediately suspended effective from the end of its first sub-phase (SP-1) on December 27, 2015 until the date the DOE notifies the company to resume petroleum-related activities.
As a result, the second sub-phase (SP-2) of SC75 has been put on hold until further notice.
“The terms of SP-2 and all subsequent sub-phases will be extended by the term of the force majeure,” Philex Petroleum said in its disclosure.
Industry sources said the grant of force majeure was due to “geopolitical reasons” because SC 75 is near the other service contracts that fall within the territorial dispute between the Philippines and China.
The oil exploration contract was awarded in 2013 under the fourth Philippine Energy Contracting Round for Petroleum (PECR) to the consortium consisting of Philex Petroleum (operator, with a 50 percent interest), PNOC Exploration Corp. (35 percent) and PetroEnergy Resources Corp. (15 percent).
SC 75 covers an area of 6,160 square kilometers (616,000 hectares) off northwest Palawan with water depths of from 1,000 to 2,600 m. It is located west of SC 58 and north of SC 63.
The exploration period in SC 75 is for seven years divided into five sub-phases.
The work program for Sub-phase 1 (SP1) includes the acquisition of a 2,237 line-km 2D seismic data within the first half of 2014. Processing and interpretation of the acquired data will follow until the end of SP1 on 27 December 2015.
In 2014, the SC 75 consortium conducted a 2D seismic acquisition survey and acquired about 2,200 km of 2D seismic data spread over the block.
During the year, the consortium also conducted 2D seismic data processing and interpretation of the marine gravity and magnetic data and reconnaissance satellite gravity data.