OPINION: Southeast Asia’s beleaguered exploration industry has received a shot in the arm with Philippines President Rodrigo Duterte moving to end the six-year moratorium that has seen seismic acquisition and drilling grind to a halt in a disputed area of the South China Sea.
“We trust China will respect our sovereign decision,” said Philippines Energy Secretary Alfonso Cusi.
The former Manila administration in 2014 declared force majeure over several service contracts in the West Philippine Sea — waters within its exclusive economic zone but also claimed by China that had scuppered some earlier exploration forays.
Operators of these service contracts are understood to have lobbied the Department of Energy to be allowed to resume exploration and the department then made that recommendation to Duterte.
Exploration is needed — and fast — as Shell’s giant Malampaya gas field off Palawan, which delivers significant feedstock volumes for power generation, goes into decline in the coming years.
The Philippines is fast gearing up for its maiden liquefied natural gas imports but new indigenous reserves could help cushion the dependence on — and cost of — these.
Beijing has made positive noises in response to Duterte’s statement, which also paves the way for the countries to start renegotiating earlier proposed joint exploration by their respective state oil and gas companies.
However, there remains concern that regional power China could exert pressure on the Philippines in such exploration negotiations, without the threat of military intervention on future unilateral exploration.
(This is an Upstream opinion article.)