China-Phil. Exploration Joint Venture - Calamian Palawan PH

30/09/2020

PNOC EC seeking to resume petroleum explorations
posted July 12, 2020...... by Alena Mae S. Flores

State-run PNOC Exploration Corp. said it is looking forward to the resolution of the territorial dispute between China and the Philippines to reinvigorate the country’s oil and gas industry.
“PNOC EC is also looking forward to the resolution of the maritime disputes between China and the Philippines as this will lead to the following: resumption of petroleum operations for SC [Service Contract] 58 [West Calamian], SC 59 [West Balabac] and SC 75 [Northwest Palawan],” PNOC-EC president Rozzano Briguez said during a webinar over the weekend.

The three service contracts are presently under force majeure, putting exploration for oil and gas resources in the disputed West Philippine Sea on hold.

Briguez said the resolution of the conflict would “boost exploration and development of hydrocarbon resources in the vast West Philippine Sea.”

He said PNOC EC would resume exploration in SC 57 and SC 59 with joint venture partners as soon as issues were resolved including the maritime dispute in the West Philippine Sea.

Briguez said PNOC EC would also continue to support exploration and production activities of its joint venture partners, such as Shell Philippines Exploration B.V. for Malampaya gas production in SC 38 and Nido Petroleum in SC 58 and PXP Energy for SC 74 & SC 75.

He said the company would also continue to explore new service contracts in Cotabato, Cagayan, East Palawan, West Philippine Sea and other prospective areas being offered by the Energy Department.

“PNOC EC also intends to pursue collaboration with other institutions and companies to further study Philippine sedimentary basins to assess their petroleum potential given new information and advances in technology,” Briguez said.

“The main objective is to open up new areas for exploration by ensuring that the country’s geologic sedimentary basins are well-studied and properly marketed to possible investors,” he said.

PNOC EC also plans to drill an exploration well in SC 37 on the shore of Cagayan.

“If it turns out to be a commercial discovery, PNOC EC will prepare a gas to power project [similar to San Antonio with a power plant development],” the official said.

PNOC EC aims to be the leading energy exploration and production company in the Philippines by 2030 with a global reach. Its areas of interest include seven petroleum service contracts and four coal operating contracts

“PNOC EC will prioritize projects with higher projected revenue or fastest ROI. Thus, we will be focusing on the development and production of mines in COC 41, and the development of the coal mine-mouth power plant project in COC 122,” Briguez said.

PNOC EC will also continue with exploration projects in COC 185 and 186 and pursue new exploration COCs through the DOE’s Philippine Conventional Energy Contracting Program. The company will also assess the potential of coal-bed methane in the COCs.

Taking advantage of the high quality of coal in Zamboanga Sibugay, PNOC EC is looking at production from two underground mines by 2025.

“PNOC EC’s underground coal mine operations will remain as the largest of its kind in the country. A coal mine-mouth power plant in Isabela Province will be in operation generating at least 50 MW. It is a pioneering undertaking utilizing low rank indigenous coal [lignite],” Briguez said.

Topics: PNOC Exploration Corp , China , Philippines , Department of Energy , Shell Philippines Exploration , Rozzano Briguez
Shared Sep 30, 2020

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​State-run PNOC Exploration Corp. said it is looking forward to the resolution of the territorial dispute between China and the Philippines to reinvigorate the countrys oil and gas industry.

30/09/2020

PNOC EC seeking to resume petroleum explorations
posted July 12, 2020...... by Alena Mae S. Flores

State-run PNOC Exploration Corp. said it is looking forward to the resolution of the territorial dispute between China and the Philippines to reinvigorate the country’s oil and gas industry.
“PNOC EC is also looking forward to the resolution of the maritime disputes between China and the Philippines as this will lead to the following: resumption of petroleum operations for SC [Service Contract] 58 [West Calamian], SC 59 [West Balabac] and SC 75 [Northwest Palawan],” PNOC-EC president Rozzano Briguez said during a webinar over the weekend.

The three service contracts are presently under force majeure, putting exploration for oil and gas resources in the disputed West Philippine Sea on hold.

Briguez said the resolution of the conflict would “boost exploration and development of hydrocarbon resources in the vast West Philippine Sea.”

He said PNOC EC would resume exploration in SC 57 and SC 59 with joint venture partners as soon as issues were resolved including the maritime dispute in the West Philippine Sea.

Briguez said PNOC EC would also continue to support exploration and production activities of its joint venture partners, such as Shell Philippines Exploration B.V. for Malampaya gas production in SC 38 and Nido Petroleum in SC 58 and PXP Energy for SC 74 & SC 75.

He said the company would also continue to explore new service contracts in Cotabato, Cagayan, East Palawan, West Philippine Sea and other prospective areas being offered by the Energy Department.

“PNOC EC also intends to pursue collaboration with other institutions and companies to further study Philippine sedimentary basins to assess their petroleum potential given new information and advances in technology,” Briguez said.
“The main objective is to open up new areas for exploration by ensuring that the country’s geologic sedimentary basins are well-studied and properly marketed to possible investors,” he said.

PNOC EC also plans to drill an exploration well in SC 37 on the shore of Cagayan.

“If it turns out to be a commercial discovery, PNOC EC will prepare a gas to power project [similar to San Antonio with a power plant development],” the official said.

PNOC EC aims to be the leading energy exploration and production company in the Philippines by 2030 with a global reach. Its areas of interest include seven petroleum service contracts and four coal operating contracts

“PNOC EC will prioritize projects with higher projected revenue or fastest ROI. Thus, we will be focusing on the development and production of mines in COC 41, and the development of the coal mine-mouth power plant project in COC 122,” Briguez said.

PNOC EC will also continue with exploration projects in COC 185 and 186 and pursue new exploration COCs through the DOE’s Philippine Conventional Energy Contracting Program. The company will also assess the potential of coal-bed methane in the COCs.

Taking advantage of the high quality of coal in Zamboanga Sibugay, PNOC EC is looking at production from two underground mines by 2025.

“PNOC EC’s underground coal mine operations will remain as the largest of its kind in the country. A coal mine-mouth power plant in Isabela Province will be in operation generating at least 50 MW. It is a pioneering undertaking utilizing low rank indigenous coal [lignite],” Briguez said.

Topics: PNOC Exploration Corp , China , Philippines , Department of Energy , Shell Philippines Exploration , Rozzano Briguez

Read more:

​State-run PNOC Exploration Corp. said it is looking forward to the resolution of the territorial dispute between China and the Philippines to reinvigorate the countrys oil and gas industry.

29/09/2020

Calamian area a ‘confidence-builder’ for joint exploration in Reed Bank – analyst

Calamian is an uncontested area. Any joint exploration with China in the area should be governed by Philippine laws, says Aaron Jed Rabena of the policy think tank Asia-Pacific Pathways to Progress

Sofia Tomacruz
Published: 7:22 PM March 7, 2018
MANILA, Philippines – Offshore Calamian, covered by Service Contract (SC) 57, could be used by the government to build confidence for joint exploration with China in the West Philippine Sea, according to an analyst.

“I think it’s a confidence-building measure on how we can proceed to discuss how we can jointly explore Reed Bank,” Aaron Jed Rabena, an analyst and program convenor at foreign policy think tank Asia-Pacific Pathways to Progress, said in a recent Rappler Talk.

Malacañang on Friday, March 2, said it was considering two areas for joint development with China in the West Philippine Sea: offshore Calamian and Reed Bank, covered by SC 57 and SC 72, respectively. (READ: Malacañang: Two areas being considered for joint exploration with China)

“I think the government would first like to start with the Calamian [area] where there’s no dispute,” Rabena said.

Calamian is an uncontested area located north of the Malampaya oil field and northwest of Palawan block. It is beyond China's 9-Dash Line, which it uses to claim most of the South China Sea, including the West Philippine Sea. (A 2016 Permanent Court of Arbitration (PCA) ruling, however, invalidated China’s claims in the West Philippine Sea.)

Unlike the Calamian area, Reed Bank is claimed by China. (READ: Stop calling it the 'disputed' West Philippine Sea – Carpio)

Similar to Malampaya?

According to Rabena, should the Philippine government pursue joint development in the areas covered by SC 57 and 72, the model for exploration here could possibly be similar to that of the Malampaya natural gas field.

“I think with this one, it is well within our area of jurisdiction – it’s the Calamian [area]; that service contract. So in that model, what would take place is the model of Malampaya,” Rabena said.

He added that with Calamian and Reed Bank within the country’s EEZ, joint exploration should work within Philippine laws. “We used to have an overlapping claim with them when the 9-Dash line was still not invalidated. But, right now, there are no overlapping claims anymore.”

In particular, Rabena cited Presidential Decree (PD) 87, wherein the maximum benefit of explorations should be received by Filipinos and the Philippine government over foreign agents.

PD 87 also states a 60%-40% division of profit out of production less the costs should be taken, with the Philippines receiving the majority.

The area is also critical in terms of helping to address the country’s energy demands. The Malampaya natural gas field, which supplies 40% of the electricity requirement of Luzon – is expected to run out of gas by 2024.

SC 72 was awarded to Forum Energy PIc, a firm led by the Manauel Pangilinan-led Philex Petroleum Corporation. According to previous reports, the firm was initially in talks with China National Offshore Oil Corporation on developing a part of the Reed Bank.

However, joint exploration and drilling surveys were stopped in 2014 as the administration of Benigno Aquino III filed the country’s case with the PCA.

'Up to China'

But would China agree to such a setup in Reed Bank?

Rabena said it would be “up to China if they would be amenable to a 60-40 agreement where Philippine laws would govern.”

He also said China would most likely prefer to split profits equally – a scenario only possible if the law were to be amended.

“I think that they would be more amenable to a 50-50 arrangement…and I think that would only be possible if we would amend our Constitution,” he said.

In a GMA News article, however, maritime expert Jay Batongbacal warned of the consequences of jointly developing the areas with China.

“Given the present situation, simply deciding to agree to jointly develop within the area of the 9-dashed lines would benefit China, regardless of the equity/sharing formula. The Philippines would thereby be implicitly acquiescing to China's claim to some kind of rights to share in the natural resources within Philippine jurisdiction,” Batongbacal said.

A report from China's Ministry of Foreign Affiars website states, among its 4 elements on "setting aside dispute and pursuing joint development," that "sovereignty of the territories concerned belongs to China." – Rappler.com

Photo below; RUNNING OUT. Gas from the Malampaya project is expected to run out in less than a decade. File photo from Sembcorp Marine website
Shared July 29, 2020

Text and photo source: https://amp.rappler.com/…/197588-calamian-confidence-builde…

21/09/2020

Calamian area a ‘confidence-builder’ for joint exploration in Reed Bank – analyst

Calamian is an uncontested area. Any joint exploration with China in the area should be governed by Philippine laws, says Aaron Jed Rabena of the policy think tank Asia-Pacific Pathways to Progress
Sofia Tomacruz
Published: 7:22 PM March 7, 2018
MANILA, Philippines – Offshore Calamian, covered by Service Contract (SC) 57, could be used by the government to build confidence for joint exploration with China in the West Philippine Sea, according to an analyst.

“I think it’s a confidence-building measure on how we can proceed to discuss how we can jointly explore Reed Bank,” Aaron Jed Rabena, an analyst and program convenor at foreign policy think tank Asia-Pacific Pathways to Progress, said in a recent Rappler Talk.

Malacañang on Friday, March 2, said it was considering two areas for joint development with China in the West Philippine Sea: offshore Calamian and Reed Bank, covered by SC 57 and SC 72, respectively. (READ: Malacañang: Two areas being considered for joint exploration with China)

“I think the government would first like to start with the Calamian [area] where there’s no dispute,” Rabena said.

Calamian is an uncontested area located north of the Malampaya oil field and northwest of Palawan block. It is beyond China's 9-Dash Line, which it uses to claim most of the South China Sea, including the West Philippine Sea. (A 2016 Permanent Court of Arbitration (PCA) ruling, however, invalidated China’s claims in the West Philippine Sea.)
Unlike the Calamian area, Reed Bank is claimed by China. (READ: Stop calling it the 'disputed' West Philippine Sea – Carpio)

Similar to Malampaya?
According to Rabena, should the Philippine government pursue joint development in the areas covered by SC 57 and 72, the model for exploration here could possibly be similar to that of the Malampaya natural gas field.

“I think with this one, it is well within our area of jurisdiction – it’s the Calamian [area]; that service contract. So in that model, what would take place is the model of Malampaya,” Rabena said. He added that with Calamian and Reed Bank within the country’s EEZ, joint exploration should work within Philippine laws.

“We used to have an overlapping claim with them when the 9-Dash line was still not invalidated. But, right now, there are no overlapping claims anymore.”

In particular, Rabena cited Presidential Decree (PD) 87, wherein the maximum benefit of explorations should be received by Filipinos and the Philippine government over foreign agents. PD 87 also states a 60%-40% division of profit out of production less the costs should be taken, with the Philippines receiving the majority.

The area is also critical in terms of helping to address the country’s energy demands. The Malampaya natural gas field, which supplies 40% of the electricity requirement of Luzon – is expected to run out of gas by 2024.

SC 72 was awarded to Forum Energy PIc, a firm led by the Manauel Pangilinan-led Philex Petroleum Corporation. According to previous reports, the firm was initially in talks with China National Offshore Oil Corporation on developing a part of the Reed Bank.

However, joint exploration and drilling surveys were stopped in 2014 as the administration of Benigno Aquino III filed the country’s case with the PCA.

'Up to China'
But would China agree to such a setup in Reed Bank?
Rabena said it would be “up to China if they would be amenable to a 60-40 agreement where Philippine laws would govern.”

He also said China would most likely prefer to split profits equally – a scenario only possible if the law were to be amended.

“I think that they would be more amenable to a 50-50 arrangement…and I think that would only be possible if we would amend our Constitution,” he said.

In a GMA News article, however, maritime expert Jay Batongbacal warned of the consequences of jointly developing the areas with China.

“Given the present situation, simply deciding to agree to jointly develop within the area of the 9-dashed lines would benefit China, regardless of the equity/sharing formula. The Philippines would thereby be implicitly acquiescing to China's claim to some kind of rights to share in the natural resources within Philippine jurisdiction,” Batongbacal said.

A report from China's Ministry of Foreign Affiars website states, among its 4 elements on "setting aside dispute and pursuing joint development," that "sovereignty of the territories concerned belongs to China." – Rappler.com

Photo below; RUNNING OUT. Gas from the Malampaya project is expected to run out in less than a decade. File photo from Sembcorp Marine website
Shared July 29, 2020
Text and photo source: https://amp.rappler.com/…/197588-calamian-confidence-builde…

https://www.rappler.com/Calamian is an uncontested area. Any joint exploration with China in the area should be governed by Philippine laws, says Aaron Jed Rabena of the policy think tank Asia-Pacific Pathways to Progress

21/09/2020

Joint oil, gas exploration deals to abide by both PH, Chinese laws – Sta Romana
Aug 29, 2019...Pia Ranada....Abridged...Shared Sep 2, 2020

Formation of steering committee, working groups
To move forward with the 2018 MOU on joint oil and gas exploration, groups stipulated by the document may be formed during Duterte's China trip.

These are the "joint steering committee" and "joint entrepreneurial working committees," said Sta Romana.

The steering committee will comprise of government officials. The MOU states that it will be co-chaired by the Philippines' Department of Foreign Affairs and China's Ministry of Foreign Affairs. Co-vice-chairs are the Department of Energy (DOE) and Chinese energy ministry. The latter will be composed of executives from companies that will take part in the oil and gas exploration.

One of the first orders of business of these groups is to lift the 2013 moratorium on exploration and drilling in the West Philippine Sea.

"The plan is to get the framework ready so that the steering committee can start the ball rolling as well as the working groups so they can start meeting so the service contracts affected by the moratorium can proceed which have been put on hold," said Sta Romana.

The committee and working groups are supposed to produce "cooperation agreements" covering specific West Philippine Sea areas by November.

Sta Romana said Duterte is determined to pursue joint exploration because of the looming energy security problem posed by the expected decline in supply from the Malampaya reserve in Palawan.

"The bigger picture is energy security. Malampaya is running dry... The President is moving with urgency to move the process forward, especially in his last 3 years," said Sta Romana.

Supply from the Malampaya gas project is projected to decline starting 2022, or the last year of the Duterte presidency, and may run out by 2024.
"The Chinese are, therefore, willing to be 'flexible' and 'pragmatic' as the two countries thresh out cooperation agreements on exploiting the resource-rich West Philippine Sea, says the Philippine envoy to China"
Any oil and gas exploration contract to be pursued in the West Philippine Sea with China must be consistent with both the Philippine and Chinese constitutions, said Philippine Ambassador to China Chito Sta Romana.

He said last August 29 in a press conference in Beijing that before President Rodrigo Duterte's evening meeting with Chinese President Xi Jinping in which the two leaders are expected to discuss oil and gas exploration the contract has to be in accordance with the Philippine Constitution and UNCLOS (United Nations Convention on the Laws of the Sea) and since the Chinese are involved also, according to the Chinese constitution. .

But existing service contracts already awarded to companies expressly recognize that the areas they cover are within Philippine sovereignty or sovereign rights, as pointed out by Supreme Court Senior Associate Justice Antonio Carpio.

It's because of the existence of such provisions that Carpio and former foreign secretary Albert del Rosario said that the joint exploration scheme entered into by the Duterte government with China is "very safe." By working under these contracts, China will be operating under Philippine laws, they said.

But if service contracts must be consistent with the Chinese constitution as well, how will China agree to the existing service contracts, for instance Service Contract No 72, which covers Recto Bank (Reed Bank)? Recto Bank is within the Philippines' Exclusive Economic Zone (EEZ) but is being claimed by China.

The Chinese government, said Sta Romana, is willing to be more "flexible" in order to push through with the exploration.

One distinct possibility is for the first exploration agreements to cover "undisputed" oil or gas-rich areas in the West Philippine Sea.

Sta Romana said there are areas which even China "accepts are undisputed." One of them is the 720,000-hectare area in Calamian, northwest of Palawan. (READ: Calamian area a 'confidence-builder' for joint exploration in Reed Bank – analyst)

Because this area is not being claimed by China, the service contract that covers it, Service Contract No 57, may be the easiest to pursue first.

"I think Service Contract No 57, that's not a problem," said Sta Romana.

The holder of SC 57 is government corporation PNOC-EC (Philippine National Oil Company-Exploration Corporation). They have agreed to partner with China state-run CNOOC (China National Offshore Oil Corporation), and Jadestone Energy Incorporated, formerly Mitra Energy Ltd, said Energy Secretary Alfonso Cusi in 2017.

Back in November 2018, SC 57 was among two oil exploration deals ready for Duterte's signature.

But it still required an executive order that would allow PNOC-EC to enter into oil exploration and production agreements with other corporations. Duterte followed through, signing Executive Order No 80 last May.
Shared Sep 2, 2020

Read more: https://rappler.com/…/sta-romana-says-joint-oil-gas-explora…

14/09/2020

Joint oil, gas exploration deals to abide by both PH, Chinese laws – Sta Romana
Aug 29, 2019...Pia Ranada....Abridged...Shared Sep 2, 2020

Formation of steering committee, working groups
To move forward with the 2018 MOU on joint oil and gas exploration, groups stipulated by the document may be formed during Duterte's China trip.

These are the "joint steering committee" and "joint entrepreneurial working committees," said Sta Romana.

The steering committee will comprise of government officials. The MOU states that it will be co-chaired by the Philippines' Department of Foreign Affairs and China's Ministry of Foreign Affairs. Co-vice-chairs are the Department of Energy (DOE) and Chinese energy ministry. The latter will be composed of executives from companies that will take part in the oil and gas exploration.

One of the first orders of business of these groups is to lift the 2013 moratorium on exploration and drilling in the West Philippine Sea.

"The plan is to get the framework ready so that the steering committee can start the ball rolling as well as the working groups so they can start meeting so the service contracts affected by the moratorium can proceed which have been put on hold," said Sta Romana.

The committee and working groups are supposed to produce "cooperation agreements" covering specific West Philippine Sea areas by November.

Sta Romana said Duterte is determined to pursue joint exploration because of the looming energy security problem posed by the expected decline in supply from the Malampaya reserve in Palawan.

"The bigger picture is energy security. Malampaya is running dry... The President is moving with urgency to move the process forward, especially in his last 3 years," said Sta Romana.

Supply from the Malampaya gas project is projected to decline starting 2022, or the last year of the Duterte presidency, and may run out by 2024.
"The Chinese are, therefore, willing to be 'flexible' and 'pragmatic' as the two countries thresh out cooperation agreements on exploiting the resource-rich West Philippine Sea, says the Philippine envoy to China"
Any oil and gas exploration contract to be pursued in the West Philippine Sea with China must be consistent with both the Philippine and Chinese constitutions, said Philippine Ambassador to China Chito Sta Romana.

He said last August 29 in a press conference in Beijing that before President Rodrigo Duterte's evening meeting with Chinese President Xi Jinping in which the two leaders are expected to discuss oil and gas exploration the contract has to be in accordance with the Philippine Constitution and UNCLOS (United Nations Convention on the Laws of the Sea) and since the Chinese are involved also, according to the Chinese constitution. .

But existing service contracts already awarded to companies expressly recognize that the areas they cover are within Philippine sovereignty or sovereign rights, as pointed out by Supreme Court Senior Associate Justice Antonio Carpio.

It's because of the existence of such provisions that Carpio and former foreign secretary Albert del Rosario said that the joint exploration scheme entered into by the Duterte government with China is "very safe." By working under these contracts, China will be operating under Philippine laws, they said.

But if service contracts must be consistent with the Chinese constitution as well, how will China agree to the existing service contracts, for instance Service Contract No 72, which covers Recto Bank (Reed Bank)? Recto Bank is within the Philippines' Exclusive Economic Zone (EEZ) but is being claimed by China.

The Chinese government, said Sta Romana, is willing to be more "flexible" in order to push through with the exploration.

One distinct possibility is for the first exploration agreements to cover "undisputed" oil or gas-rich areas in the West Philippine Sea.

Sta Romana said there are areas which even China "accepts are undisputed." One of them is the 720,000-hectare area in Calamian, northwest of Palawan. (READ: Calamian area a 'confidence-builder' for joint exploration in Reed Bank – analyst)

Because this area is not being claimed by China, the service contract that covers it, Service Contract No 57, may be the easiest to pursue first.

"I think Service Contract No 57, that's not a problem," said Sta Romana.

The holder of SC 57 is government corporation PNOC-EC (Philippine National Oil Company-Exploration Corporation). They have agreed to partner with China state-run CNOOC (China National Offshore Oil Corporation), and Jadestone Energy Incorporated, formerly Mitra Energy Ltd, said Energy Secretary Alfonso Cusi in 2017.

Back in November 2018, SC 57 was among two oil exploration deals ready for Duterte's signature.

But it still required an executive order that would allow PNOC-EC to enter into oil exploration and production agreements with other corporations. Duterte followed through, signing Executive Order No 80 last May.
Shared Sep 2, 2020

Read more: https://rappler.com/…/sta-romana-says-joint-oil-gas-explora…

21/08/2020

Manila opens the door to Chinese E&P

An executive order has reduced the constraints on Philippines’ state oil company working with third parties on oil and gas deals

An executive order from Philippines President Rodrigo Duterte that relaxed the rules on oil and gas exploration should make it easier for the government to cement its recent outreach to China, as it opens exploration blocks in a bid to reverse a precipitous decline in production.

Executive Order 80, issued in late May, reverses a previous ruling from 2006 that prevented the Philippine National Oil Company Exploration Corporation (PNOC-EC) from directly farming out its acreage. From now on, third parties can participate in service contracts awarded by the government to PNOC-EC, the upstream arm of state-owned Philippine National Oil Company, without the need for public bidding.

PNOC-EC has been on the hunt for partners to help develop offshore reserves. Crucially, the order clears the path for a farm-out that would allow Cnooc to take over operatorship and 51pc of Service Contract No. 57 (SC 57) covering offshore areas of northwest Palawan island, in the West Philippine Sea. Duterte's increasingly warm ties with China means Cnooc is increasingly in the frame for the award.

The Philippines, which has in the past contested Chinese claims in the South China Sea, signed a memorandum of understanding (MoU) with China in November last year to conduct joint exploration for oil and gas.

The Philippines-China MoU on cooperation in oil and gas development MoU identified Cnooc as China's representative in any activities. Analysts have questioned whether this would affect Manila's claims in the West Philippine Sea, which lies within its exclusive economic zone (EEZ).

The Washington-based Asia-Maritime Transparency Initiative warned that the MoU might hinder unilateral exploration and development by the Philippines of other areas of the West Philippines Sea, or be the basis of an exclusionary policy that eventually locks the Philippines into partnerships with only Chinese companies.

China's Holy Grail is securing joint development projects in other countries' EEZs in the South China Sea, says Bill Hayton, an associate fellow at Chatham House's Asia Pacific programme. "These are state-to-state deals where countries agree to share the resources in their EEZ. The Chinese tend to avoid joint venture deals where five countries might be sharing resources. That's not their game," he says. "Whereas the Philippines has been talking about joint development as they know that is what China wants to hear."

Urgent exploration
Such concerns are downplayed by Duterte, who analysts suggest has his own interests in striking deals with Chinese corporates. "If they are Chinese state-controlled or Communist Party-led companies, they might take on acreage for political rather than economic reasons—and that might dovetail nicely with Duterte's desire to have investments that he can direct," says Hayton.

There are wider issues at play for Manila—which is offering 14 petroleum exploration blocks (four onshore and 10 offshore) to potential investors this year—as it steps up the search for new oil and gas supply to counter declining production and reduce growing dependence on imports to meet rising demand.

“The Philippines has been talking about joint development as they know that is what China wants to hear.”

The Philippines remains in dire need of more oil and gas exploration. Its existing reserves are in decline and as its sole producing Malampaya gas-to-power project is approaching the end of its production life, noted Fitch Solutions in a research note issued on 10 May. The Malampaya field is responsible for 97.5pc of domestic oil and gas production, although Fitch noted it is widely expected to near depletion by 2024 as existing reserves run out and output maintenance efforts slow.

That puts addition pressure on the authorities to attract IOCs into its upstream, and may explain why the government has extended a deadline by three months to 21 August for bids under the Philippine Conventional Energy Contracting Programme. There are indications of only limited IOC interest in licenses that mostly lie in unexplored basins.

If international companies choose to steer clear, Duterte's gamble is that Chinese heavweights will be more forthcoming.
Shared Aug 21, 2020
Source:

An executive order from Philippines President Rodrigo Duterte that relaxed the rules on oil and gas exploration should make it easier for the government to cement its recent outreach to China, as it opens exploration blocks in a bid to reverse a precipitous decline in production.