A Chinese coast guard vessel reportedly has again impacted seismic survey work offshore the Philippines in a contested area of the South China Sea, which has resulted in the Philippines authorities calling a halt to the latest exploration in the area.

Ship-tracking data suggested that CCG vessel 4201 shadowed the Norwegian-flagged survey vessel Geo Coral and its support vessel Mariska G offshore northwest Palawan, where PXP Energy’s Service Contract (SC) 75 is located, Vietnamese maritime observer Duan Dang wrote in his newsletter South China Sea Brief, according to Philippines daily The Inquirer.

PXP had plans for a 3D seismic shoot on SC 75 and was to drill two appraisal wells on SC 72, all via its subsidiary Forum Energy.

However, PXP confirmed that the Philippines Department of Energy (DoE) earlier this month told it to suspend all exploration activities for these two blocks “until such time that the Security, Justice & Peace Coordinating Cluster (SJPCC) has issued the necessary clearance to proceed”.

PXP said this was the first it had heard of any such requirement for clearance from the SJPCC before undertaking its work commitments on SC 75 and SC 72.

The DoE in October 2020 had lifted an earlier force majeure on the two offshore blocks after their operators threatened to cancel them, and PXP added it had kept the department informed of its planned exploration work.

The SJPCC provides "the preservation of national sovereignty and the rule of law in the Philippines".

PXP had chartered the two vessels for its planned survey work on SC 75, which covers 6160 square kilometres.

Although the Chinese coast guard vessel did not directly interfere with the work — the seismic acquisition had yet to commence — it was reportedly tailing them at the time that the DoE told the operator to halt all work on the acreage.

VesselsValue shows the Mariska G (ex-Pristine Alpha) as en route to Busan, South Korea, while VesselFinder shows the Geo Coral has just arrived in Busan.

Exclusive Economic Zone

SCs 72 and 75 are both located in the Philippines Exclusive Economic Zone, where the nation has sovereign rights to explore and exploit hydrocarbons.

However, China claims most of the South China Sea for itself via the so-called nine-dash line.

Malaysia, Brunei, the Philippines, Taiwan and Vietnam also have overlapping claims for parts of these waters.

SC 72, which is operated by PXP subsidiary Forum Energy of the UK, covers 8800 square kilometres in the Recto (Reed) Bank and hosts the potentially giant Sampaguita gas field where appraisal drilling is hoped will confirm sufficient commercial reserves to be worthy of development.

The vessel Cassandra VI was on its way to SC 72 to carry out a geographical site survey before the DoE effectively pulled the plug on exploration work in the contested area.

The SJPCC reportedly agreed that its approval was needed as a precondition in upstream activities on the blocks “taking into consideration the political, diplomatic and national security implications of any activity in the West Philippine Sea”.

PXP and Forum had suspended their operations on 6 April although at the time the companies said they understood the DoE’s suspension to be temporary given the department’s earlier lifting of force majeure and its keenness for exploration work to resume in the area.

In the absence of subsequent written confirmation from the DoE that the operators could immediately resume exploration, the companies said they are considering the work suspension issued by the department to be indefinite and a force majeure event that will entitle them to be excused from their respective work obligations.

PXP and Forum added that they have had to terminate the supply services and agreements to mitigate the losses from what now appears could be an indefinite suspension of its latest exploration activities.

The Philippines and China in November 2018 signed a memorandum of understanding to conduct joint oil and gas exploration and development in disputed waters of the South China Sea, with Philippines President Rodrigo Duterte and Chinese President Xi Jinping at the time seemingly setting aside their differences over sovereignty in the region.

This agreement had called for a definitive framework to be drafted within one year, but no firm deal has yet been struck despite subsequent statements from the nations’ respective foreign ministers stating their willingness to advance bilateral cooperation in upstream oil and gas ventures.

The Philippines nine years ago brought before the UN Convention on the Law of the Sea (UNCLOS) a case against China that focused on maritime entitlements and the status of features in the South China Sea, which is believed to be prospective for oil and gas.

An UNCLOS tribunal in 2016 unanimously found in favour of the Philippines, ruling that China’s nine-dash line and claim to historic rights in the South China Sea were both invalid under international law.

PXP has a 50% interest in SC 75 while Forum, in which PXP holds a 79.13% direct and indirect interest, has a 70% participating interest in SC 72. PXP therefore has a total economic interest of 54.36% in SC 72.