Page 8 - AsiaElec Week 43 2020

AsiaElec COMMENTARY AsiaElec

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

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

P8 www. NEWSBASE .com Week 43 28•October•2020