West Philippine Sea

Duterte lifts ban on West Philippine Sea oil exploration

Pia Ranada
The decision brings the Duterte government a step closer to implementing its joint exploration deal with China

Philippine President Rodrigo Duterte has lifted his predecessor’s ban on oil exploration in the West Philippine Sea, bringing the country one step closer to implementing a joint exploration deal with China.

Energy Secretary Alfonso Cusi said on Thursday, October 15, that Duterte had approved his department’s recommendation to lift the ban, in place since 2013.

“I thank the President for approving the DOE (Department of Energy) recommendation. We need to explore so we may address the country’s energy security,” he said in a press release.

The lifting of the moratorium was on the Duterte government’s to-do list to push forward with its memorandum of understanding (MOU) on joint exploration with China. The agreement was signed during Chinese President Xi Jinping’s 2018 visit to the Philippines, a high point in the country’s relationship with Beijing under the Duterte administration.

The ban was put in place by President Benigno Aquino III after his government took China to court for encroachments in the West Philippine Sea, which is said to be rich in oil and gas but is part of the Philippines’ Exclusive Economic Zone.

The policy meant that the service contracts for oil resource development in the West Philippine Sea could not be pursued by the corporations that won them.

Who benefits?

Duterte’s decision means companies holding Service Contracts No 59, 72, and 75 can now begin petroleum-related activities in the West Philippine Sea areas covered by their contracts.

Cusi said “resume-to-work” notices were issued by the DOE to these service contractors.

Service Contract No 59 (West Balabac, southwest Palawan) is held by state-run Philippine National Oil Company-Exploration Corporation.

London-listed company Forum Energy holds Service Contract No 72, which covers oil-rich Recto Bank (Reed Bank).

Service Contract No 75 is operated by PXP Energy Corp, led by Filipino tycoon Manny V Pangilinan.

Cusi said the lifting of the suspension is good news for the Philippine economy as it would attract new foreign direct investments and generate jobs.

“The lifting of the suspension places the service contractors under legal obligation to put capital into the contract areas and hire Filipino engineers and technical workers to resume exploration,” he said.

In pursuit of the joint exploration deal, China had authorized the China National Offshore Oil Corporation (CNOOC) to undertake oil and gas exploration, while the Philippines said companies already holding service contracts would have authority.

The two countries formed a joint intergovernmental committee, led by their foreign ministries. The companies that would conduct the oil exploration activities are to form an inter-entrepreneurial working group.

Cusi said he has already informed Foreign Secretary Teodoro Locsin Jr of the moratorium’s lifting.

The decision, said the DOE, was arrived at in “good faith” and with “full regard of the ongoing negotiations between the Philippines and China,” Forum Ltd, and CNOOC. – Rappler.com

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Pia Ranada

Pia Ranada is a senior reporter for Rappler covering Philippine politics and environmental issues. For tips and story suggestions, email her at pia.ranada@rappler.com.