Philippines lifts South China Sea oil exploration moratorium
(Bloomberg) --The Philippines lifted its moratorium on oil and gas exploration in disputed areas of the South China Sea, a move that was welcomed by China and boosted the shares of the Southeast Asian nation’s energy producers.
Resume-to-work notices were issued to Philippine National Oil Company-Exploration Corp., PXP Energy Corp. and unit Forum Ltd., which operate service contracts within the disputed areas, according to Energy Secretary Alfonso Cusi. Bids of Udenna Corp. and PXP Energy to explore three new areas are under review and may be subject to competitive challenge.
Philippine energy producers rallied, with PXP, the nation’s biggest listed oil and gas exploration company based on market capitalization, surging by the maximum daily limit of 50%.
“It’s a unilateral action on our part to ask licensees to start their activity,” Cusi said in a virtual briefing on Friday. It’s imperative exploration restarts within the Philippines’ exclusive economic zone as gas reserves in the Malampaya field will be depleted in a few years, he said in a separate statement Thursday.
The Philippines suspended oil exploration in the South China Sea in 2015 after the nation filed a case with the Permanent Court of Arbitration over the disputed waters. In 2016, the international panel rebuffed Chinese claims over most parts of the sea.
Philippine President Rodrigo Duterte has said he would seek to uphold the court victory, even as his leadership has seen the nation pivot closer to China and set a framework agreement that would pave the way for future joint exploration. PXP Energy and the state-owned China National Offshore Oil Corp. were in talks for a possible venture prior to the moratorium.
China National Offshore Oil didn’t immediately respond to emails seeking comment. PXP Energy Chairman Manuel Pangilinan didn’t immediately reply to mobile-phone messages.
“China and the Philippines have reached consensus on the joint development of oil and gas resources in the South China Sea, and we have established relevant consultation and cooperation mechanism,” Foreign Ministry spokesman Zhao Lijian told a regular news briefing in Beijing on Friday. “We hope the two sides can work together for new progress in the joint development.”