MVP: Philex to drill for oil at Reed Bank

Posted at 05/17/12 9:34 PM

MANILA, Philippines - A Philippine oil firm said Thursday it would start drilling next year at a potentially massive natural gas field at a reef in the South China Sea also claimed by China.

The drilling of "two appraisal wells" at Reed Bank will be carried out by August, 2013, said Philex Petroleum chairman Manuel Pangilinan.

"We need to do a lot before we know the amount of resources beneath those waters," he told stockholders.

His comments come amid high tension with China over territorial disputes in the South China Sea, with Manila and Beijing locked in a standoff over the Scarborough Shoal.

Philex Petroleum said last month the field at Reed Bank could hold 4.66 trillion cubic feet (TCF) of gas, nearly twice as much as the Philippines' largest known deposits.

China claims almost all of the South China Sea, including the Reed Bank, which is about 148 kilometers (92 miles) off the Philippine island of Palawan and which the Philippines claims as its territory.

Last year the Philippines accused Chinese vessels of harassing an exploration vessel off Reed Bank, and Manila has repeatedly accused China of aggressive actions in disputed waters.

Pangilinan also said he met with officials of China National Offshore Oil Corporation (CNOOC) in Beijing recently to discuss their offer to jointly develop the Reed Bank field.

But he said that other big companies had also approached Philex, adding that his firm would need the help of a major oil company as a partner to develop the Reed Bank.

"A gas field will need major expenditures and the help of international oil firms that have the technical capability and financial resource," he said.

Asked if having CNOOC as a partner might assuage the Chinese, he said: "I'm assuming the political aspects would recede in the background."

However, he would not speculate on what would happen if Philex chose another partner.

"If gunboats appear on the horizon, there is nothing we can do," he added.

For over a month, Philippine and Chinese ships have been engaged in a standoff to press their conflicting claims to the Scarborough Shoal, which is more than 400 kilometers to the north of Reed Bank.