Page 11 - GLNG Week 42

GLNG COMMENTARY GLNG

Philippines lifts upstream

moratorium in disputed waters

With production projected to dry up from the giant Mahakam gas field, Manila

hopes to be able to bring a replacement on stream within the next few years

POLICY THE Philippines has lifted a six-year morato- Manila and Beijing have been negotiating for
rium on exploration in disputed waters of the years over the joint exploration of the disputed
WHAT: South China Sea in response to growing con- waters, with both sides eager to begin develop-
Philippine President cerns over the country’s future energy security. ment while reluctant to give any ground over
Rodrigo Duterte has lifted The country relies heavily on the giant sovereignty.
a six-year moratorium Malampaya offshore natural gas field to power Duterte has courted controversy at home for
covering blocks in several thermal power plants (TPPs) on the his more relaxed approach to China’s claim over
disputed waters. main island of Luzon. However, with the field areas that lie within the Philippines exclusive
anticipated to begin running dry over the next economic zone (EZZ).
WHY: few years, the government has turned to LNG The president has repeatedly sidelined the
The country’s domestic imports to help plug the gap. Permanent Court of Arbitration’s (PAC) ruling
gas production is set to This will eventually see the Philippines in 2016 that dismissed much of China’s claim to
decline rapidly in the become heavily reliant on foreign supplies of the the South China Sea in order to proceed with
coming years. fuel, given local opposition to coal-fired power negotiations surrounding joint exploration of
generation and the lack of nuclear-powered contested waters. Beijing has refused to recog-
WHAT NEXT: alternatives, as the country continues to transi- nise the ruling, preferring to ramp up its mili-
PNOC hopes to bring new tion towards renewable energies. tary presence within the region instead.
fields on stream by 2026, Relying on foreign hydrocarbon supplies Duterte has argued that the Philippines needs
but possible investment inevitably raises some serious questions about to negotiate with Beijing rather than adopt a
hurdles could scupper national energy security, given rising tensions unilateral approach, raising the spectre of an
this goal. along trade routes in the South China Sea as well unwinnable war as a consequence of a more
as market volatility that can result in a seesawing aggressive policy.
of energy prices. However, politics are not the only motivator
behind the decision to open the door to explo-
Lifting the ban ration, with Manila increasingly concerned by
By lifting the moratorium on exploration drilling an imminent decline of national gas production.
and seismic data acquisition in waters that both “With the impending depletion of our natural With the field
China and the Philippines claim, which Manila gas reserves in Malampaya, it is the department’s
has dubbed the West Philippine Sea (WPS), Phil- position that there is an urgent imperative to anticipated to
ippine President Rodrigo Duterte hopes to kill resume exploration, development and produc- begin running
two birds with one stone. tion activities within our EEZ to ensure conti-
“[Duterte] has approved the recommenda- nuity of supply of indigenous resources in the dry over the next
tion of the Department of Energy [DOE] to country,” Cusi said.
lift the suspension of petroleum activities and few years, the
the resumption of petroleum exploration in Seizing the initiative
the WPS,” Energy Secretary Alfonso Cusi told Cusi said the DOE had issued “resume-to-work government has
reporters on October 15. notices” to service contractors working in ser- turned to LNG
Cusi said China National Offshore Oil Corp. vice contracts (SC) 57, 59, 72 and 75, after explo-
(CNOOC) as well as state-run Philippine ration efforts were suspended on the back of imports to help
National Oil Co. (PNOC) and privately owned strained bilateral relations.
Udenna Energy and PXP Energy stood to gain Forum Energy, a subsidiary of PXP, operates plug the gap.
immediately from the ban being lifted. SC 72 with a 70% stake and has been in talks
“We need to explore, so we may address the with CNOOC over the acreage for a number of
country’s energy security,” Cusi said. He added: years. PXP notes on its site that the licence has
“The lifting of the moratorium was arrived at been under force majeure since December 2014,
in good faith and with full regard to the ongo- owing to the South China Sea dispute, but that
ing negotiations between the Philippines and Forum aims to drill two wells over the Sampa-
China, and Forum Ltd and CNOOC.” guita field.

Week 42 23•October•2020 www. NEWSBASE .com P11