Philex explores prospects outside disputed Reed Bank

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Philex explores prospects outside disputed Reed Bank
This is after the Philippine government in March 2015 suspended all exploration works at the Reed Bank in the South China Sea

MANILA, Philippines – The group of business tycoon Manuel V. Pangilinan is exploring oil and gas prospects outside the disputed Reed Bank area of the West Philippine Sea (South China Sea).

Oil and gas reserves at the Reed Bank are said to be larger than those in Malampaya natural-gas field – of which power plants account for 40% of the electricity requirement of Luzon.

Oil and gas reserves in Malampaya are expected to be tapped out by 2024.

“I think in areas outside the disputed territory, there are plans. There’s an ongoing survey work outside the disputed area,” Philex Petroleum Corporation chairman Pangilinan said.

Philex holds a 60.49% interest in UK-based Forum Energy Plc, which has a 70% stake in Service Contract No. 72 (SC 72) – an oil and gas exploration permit covering the Sampaguita natural gas prospect in the Reed Bank, to the west of Palawan.

It was in 2015 when the government declared force majeure on the license. As a result, the second sub-phase of the petroleum contract, which involves drilling two wells, was put on hold until further notice.

“There’s no progress. We are still on a standstill,” Pangilinan said.

After 2015 force majeure

“The Department of Energy (DOE) has asked us that there be no activities in the South China Sea. So, there’s been no activity in SC 72,” he added. “We have two years to complete the program, but that’s been suspended because of the DOE directive to us. So, I guess, it’s a moveable date.”

Philex Petroleum reduced its net loss incurred in 2015 to P87.5 million ($1.86 million) from P225.6 million ($4.80 million) in 2014.

The net loss was a result of lower petroleum revenues contributed by its subsidiary Forum Energy, following a steep decline in crude oil prices and a lower production from Service Contract (SC) 14C1 Galoc.

However, the charge in impairment to subsidiary Pitkin Petroleum Plc’s SC 6A– Octon in 2014 tempered the net loss for the year.

Pitkin had opted to withdraw from SC 6A located in waters northwest of Palawan.

For this year, Philex Petroleum said it will continue efforts to reduce operating expenditures “through the rationalization of the company’s business structure and asset portfolio particularly in the current low oil-price environment.”

“We are just a concessionaire. The assets are owned by the government. We should follow their directive,” Pangilnan said.

Exploration outside Reed

While exploratory work on SC72 is put on hold, Pangilinan’s group is currently looking at the prospects of “two to three assets outside SC72.”

He said these assets could be among the areas included in the 5th Philippine Energy Contracting Round (PECR).

PECR is a transparent mechanism that allows the government to develop and utilize indigenous petroleum resources under a service contract regime through partnerships with qualified local and international exploration companies.

“I think so. SC 50 or 54, or something like that,” said Pangilinan when asked if the “two to three” prospects are part of the PECR5.

Under the PECR5, 11 petroleum blocks were offered for exploration and development. These blocks, with a total of more than 4.7 million hectares (ha) located in West Luzon, Southeast Luzon, West Masbate/Iloilo, East Palawan and Recto Bank, were offered for exploration and development.

The areas for petroleum exploration include Area 1 in Southeast Luzon; 2 and 3 in Masbate-Iloilo; 4 and 5 in Northeast Palawan; 6 in Southeast Palawan; 7 in West Palawan; 8-11 in West Luzon.

Two of the blocks are located close to the Spratly Islands, of which a portion are claimed by the Philippine government, which are areas under territorial dispute with China. –

$1 = P46.95

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