Forum Energy prepares for Recto Bank drilling

MANILA, Philippines - Forum Energy, a UK oil and gas exploration company which is majority owned by businessman Manuel V. Pangilinan, will undertake seismic studies in the disputed Recto Bank in offshore Palawan while waiting for the government’s go-signal for actual drilling works to start, Pangilinan said late Monday.

“We will undertake studies next year so there could be a seismic survey done as early as April or May 2015 and do the proposed appraisal of drilling for two wells in 2016,” he told reporters after a briefing of Manila Electric Co. (Meralco), the country’s biggest power distributor which he chairs.

Forum holds a 70 percent interest in Service Contract 72, the contract to explore Recto Bank which is estimated to contain prospective resources of as much as 16.6 trillion cubic feet of gas and 416 million barrels of oil.

Monte Oro Resources and Energy Inc. holds the remaining 30 percent stake in Service Contract 72.

Philex Mining, a company chaired by Pangilinan, owns 64.45 percent of Forum Energy through its interests in FEC Resources Inc. and Philex Petroleum Corp., with the remaining interest held by other shareholders.

Unfortunately for the Forum-led consortium, the resource rich territory is at the center of geopolitical tensions with China, prompting the Department of Energy (DOE) to issue in 2012 a moratorium on all drilling works in the disputed area two years after the group obtained the exploration license from the DOE in 2010.

To date, the company has not been able to drill the oil and gas field.

Because of the moratorium, Forum sought an extension of the work program to 2015 instead of the 2013 deadline. The DOE granted the extension in July, which is already the second two-year reprieve given to the company.

Pangilinan said that when the arrangements for the studies are finalized, Forum would advise the Philippine government and the China National Offshore Oil Co. (CNOOC), China’s state-owned oil producer.

“As soon as the arrangements are finalized, we will advise our government and as a matter of courtesy, to CNOOC,” he said.

Forum and CNOOC have been in discussions for a possible commercial arrangement for exploratory works, but talks have been suspended and have not resumed, Pangilinan added.

The Philippines has brought the territorial dispute matter to the United Nations but the issue remains pending with the international body.

A government source said authorities are waiting for the UN’s decision, which is expected to come out in February, before it gives the Forum-led consortium the go-signal to drill in the area.

“The direction of the Aquino administration is restrained action on the West Philippine Sea until the decision of the UN comes out. This may come out in January or February,” the source said in a separate interview.