by: joeborgz
Philippines
says gas from disputed field should be used domestically
The
Philippines will insist that any gas produced from an offshore field a unit of
Philex Petroleum Corp hopes to develop with China's CNOOC Ltd be used
domestically, a senior energy official said on Wednesday.
London-listed
Forum Energy Plc, a unit of Philex, is holding talks with CNOOC, the Hong
Kong-listed unit of China National Offshore Oil Company, for a possible joint
venture to explore for oil and gas reserves in an area of the West Philippine
Sea, a deal that may later lead to a production agreement, Energy Secretary
Jericho Petilla said.
Service
Contract 72 in the Reed Bank holds the Sampaguita field, which is estimated to
have 20 trillion cubic feet of natural gas, dwarfing Malampaya, the Philippines'
current sole gas producer with only about 2.7 tcf of gas.
"What
I know is they are having regular meetings, that's the way to move forward,"
Petilla told reporters. "Certainly, we will not agree that it (the gas) will be
sold elsewhere when we actually need it," he said.
Manila
needs to find a replacement for the natural gas produced in the Malampaya field,
which is expected to operate only until 2024, Petilla
said.
Any
deal would have to be reviewed by government lawyers, but Manila is open to an
ownership structure of SC 72 similar to that of Malampaya, he
said.
Malampaya
is 90 percent owned by a consortium led by Shell Philippines Exploration B.V. of
Royal Dutch Shell Plc and 10 percent held by a state
agency.
China
says it owns the Reed Bank, but SC 72 falls within the Philippines' 200-mile
exclusive economic zone (EEZ), with Manila insisting on sole sovereignty over
the waters.
"We
maintain that the area that Forum Energy is exploring is clearly within our EEZ
and therefore any exploitation of the same has to be in conformity with our
laws," Philippine President Benigno Aquino said in a forum with foreign
press.
Forum
approached CNOOC as early as last year for an agreement on a joint exploration
venture so that the gas resources in the SC 72 block could be developed despite
the sovereignty dispute.
Forum
Energy has extended its drilling programme for SC 72 by two years to August 2015
due to the territorial dispute.
Forum
had earlier disclosed plans to conduct a survey to identify and evaluate other
gas prospects near the Sampaguita gas field and the Reed Bank, despite problems
with previous survey and drilling attempts due the diplomatic wrangling between
Manila and Beijing.
When
asked about how sovereignty issues raised by China and the Philippines over the
waters weigh on the discussions between Forum and CNOOC, Petilla said: "Those
are the governments, I'm hopeful of the commercial
(talks)."
There
was no immediate reply from Forum Energy when asked about the talks.
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