MVP hopeful Philippines-China deal to jumpstart oil exploration projects

MANILA, Philippines — Businessman Manuel V. Pangilinan is hopeful that the deal between the Philippines and China on joint oil and gas development in the West Philippine Sea would be a positive jump-off point for exploration projects in the disputed waters.

The signing of a memorandum of understanding (MOU) between the Philippines and China is a small but significant step for the country, Pangilinan said in his message during the Meralco Technology and Innovation Summit 2018 yesterday.

In addition, he said the MOU would also have an impact on the liquefied natural gas (LNG) sector and the country’s goal of achieving energy security using domestic resources.

“The impact on downstream activities, on the planned gas terminal, possibly LNG plants and Meralco itself, I think, in the medium term is quite significant,” he said.

Pangilinan said the deal could have positive spill over effects in the oil and gas exploration projects in disputed waters.

“I do hope that this could lead to some positive steps that we can take in respect of the work program that the group presented to the previous government covering the exploration and development work,” he said.

Pangilinan is chairman of PXP Energy Corp., which holds a 78.98-percent operating interest in Service Contract  (SC) 72 or the Recto Bank in the West Philippine Sea through London-listed Forum Energy plc.

SC 72, which covers Recto (Reed) Bank in the disputed territory, is among the projects affected by the moratorium issued by the Department of Energy on all exploration and drilling works in December 2014 and 2015 amid rising maritime tension with China.

Recently,  businessman Dennis Uy’s Dennison Holdings Inc. acquired a 14.78 percent interest in PXP Energy.

The two firms also finalized a deal allowing the PXP Energy to acquire up to 49 percent in the Phoenix Petroleum’s  stake in its joint venture with China National Offshore Oil Co. (CNOOC) for LNG development in exchange for shares, subject to the approval of Phoenix Petroleum board and consent of CNOOC.

At the start of Chinese President Xi Jinping’s two-day state visit in the country, Philippine and Chinese officials signed 29 agreements including a MOU on joint oil and gas development.