03 October 2014

PHL Will Drill in Disputed Area

With or without Chinese cooperation, the Philippines is bent on pursuing its plans to drill oil in the disputed area. That's what the chairman of an energy company said on 25 September after a Chinese state-owned oil producer hasn't responded to a revived proposal to jointly explore a disputed area of the South China Sea. The drilling will start on 2016 and China will have to deal with it.

Manuel V. Pangilinan said that Filipino-British company Forum Energy PLC communicated the offer to China National Offshore Oil Corp. to explore Reed Bank, northwest of the Philippine island of Palawan. Philippine and Chinese vessels had a confrontation there three years ago.

Pangilinan said the Chinese company, also known as CNOOC, has not responded but Forum is continuing its attempts to engage with the Chinese company. He said the project has not attracted other investors because it is in an area of conflicting territorial claims and other investors did not want to offend China.

Pangilinan is chairman of Philex Petroleum Corp., majority owner of London-based Forum Energy that has been awarded the exploration contract.

He had an initial meeting with CNOOC President Yang Hua in 2012, but the talks have stalled, with the territorial conflict hampering exploration in the area.

Pangilinan said Forum still intends to drill two wells in first half of 2016.

"We will do it on our own if we have to ... as long as we are not disturbed," he said.

The Department of Energy (DOE) has extended Forum's delayed drilling program by a year, giving it up to 15 August 2016 to fulfill its contractual obligations. Pangilinan said weather would permit drilling only from March to May.

Territorial spats between China and the Philippines over parts of the South China Sea have worsened in recent years, straining ties.

President Benigno Aquino III on Tuesday voiced concern that two Chinese hydrographic ships sighted by the military at the disputed Reed Bank in June could presage an attempt to drill for oil there.

In March 2011, Chinese ships tried to drive away a Philippine exploration vessel at the Reed Bank. The Philippines deployed two air force planes but the Chinese patrol ships had left by the time the aircraft reached the contested area.

China and the Philippines, along with Brunei, Malaysia, Taiwan and Vietnam, have been contesting ownership of mostly barren islands, islets, reefs and surrounding waters in the South China Sea for years.