PH puts gas, oil exploration plans in S.China Sea on hold

Posted at 12/11/2012 6:44 PM | Updated as of 12/11/2012 8:21 PM

MANILA - The Philippines is temporarily holding off the awarding of contracts to companies interested in conducting gas and oil exploration in the South China Sea due to a lingering territorial dispute with neighboring countries, a senior official said Tuesday.

Energy Secretary Carlos Jericho Petilla told Kyodo News that the process is "on hold right now" pending concurrence by the Department of Foreign Affairs.

On July 31, the Philippine government opened three areas in the South China Sea close to the country's island province of Palawan for bidding, believing they contain large gas and oil deposits. The three blocks are located near the already developed Malampaya field.

Six companies expressed interest and formally submitted bids for the three areas.

"It is not only the commercial issue that we're talking about here. We have to consider everything as a whole," Petilla said.

Petilla explained that while his department determines the technical and financial capability of the interested firms, the Department of Foreign Affairs has a say on final approval, which will be made by the president because of the sovereignty aspect.

A manager of one of the six companies expressed frustration over the development, saying it goes against the government's pronouncements that the three areas are well within Philippine territory.

Speaking to Kyodo News on condition of anonymity, the manager said the development leaves them hanging in the air.

"We feel that there really is no reason to put it on hold, especially in our area where we are bidding because that's the least controversial among the three. We are bidding for the area that's closest to Philippine soil. All the while, the government has been saying all these three areas are well-defined to be within Philippine territory," the manager said.

But he said he understands if the government's intention is to avoid a repeat of last year's harassment by Chinese vessels of a Philippine energy survey team at Reed Bank, which is close to one of the three blocks offered for exploration.

"I don't think they're complaining violently. But they just want it resolved. They understood. And I think they also do not want to proceed if the issues at hand are not settled," Petilla said when asked of the companies' reaction to the delay.

The six companies that submitted bids are Helios Petroleum and Gas Corp., Philippine National Oil Co., Philex Petroleum Corp., Petro Energy Resources Corp., Philodrill Corp. of the Philippines, and Pitkin Petroleum Plc.

The exploration is part of the government's long-term measures as far as energy is concerned to be able to avoid reliance on imported resources, mitigate the impact of fluctuating oil prices, and prepare for the projected expiration of the Malampaya gas field by 2024.

China and Vietnam claim all territories in the Paracel and Spratly island groups in the South China Sea, while Malaysia, Brunei, Taiwan and the Philippines claim parts of it.

==Kyodo