Retired Justice Antonio Carpio has urged President Ferdinand Marcos to provide security for the drilling operations of Forum Energy Ltd. when the company resumes its stalled oil and gas exploration in the South China Sea.
“Forum Energy has publicly stated that their survey and drilling ships need protection when they go to Reed Bank. Hopefully, the new Marcos administration will find the courage to exercise the much needed political will to protect Forum Energy’s survey and drilling ships,” Carpio said at a Nov. 9 workshop on the South China Sea dispute.
He said that Forum Energy, which holds a majority stake in Service Contract (SC) No. 72 in Recto Bank (international name: Reed Bank), is “now preparing” to send again its survey ships to the area.
“Recently, the Department of Energy (DOE) under the new Marcos Jr. administration announced that it was in ‘talks with existing service contract holders so they can proceed with their work programs’ to survey and drill in Reed Bank,” Carpio disclosed at the workshop organized by the Asian Studies Centre, St Antony’s College and the China Centre at University of Oxford in the United Kingdom.
However, the DOE has not announced any new development on this but PXP Energy, the parent company of Forum Energy, said in an Oct. 26 disclosure to the Philippine Stock Exchange that it continues to coordinate with the government on the resumption of activities in Recto Bank.
PXP Energy has a 50% interest in SC 75, also in Recto Bank, and a 70% participating interest in SC 72 through Forum Energy.
While Carpio admitted that Marcos has been “saying the right things” in asserting the Philippines’ interests in the West Philippine Sea, he challenged the president to “walk the talk.”
“The issue is will the president send the Coast Guard and Navy ships to protect … the survey and drilling ships that will go to Reed Bank,” he said.
Carpio noted that Malaysia and Indonesia, two of five coastal states in Southeast Asia with competing claims with Beijing in the South China Sea, continued with their exploration activities within their exclusive economic zones under the United Nations Convention on the Law of the Sea (UNCLOS) last year and in 2020 despite China’s bullying to stop them.
“Malaysia and Indonesia successfully asserted their sovereign rights in their exclusive economic zones despite threats of war from China and harassment from Chinese Coast Guard vessels. (They did this) even without an arbitral award or a mutual defense treaty with a nuclear-armed state,” he stressed.
Carpio said the Philippines should have exercised the same political will of these two claimants in the region instead of imposing a ban on its drilling activities so crucial to the country’s energy supply.
On April 6, 2022, Forum Energy suspended its exploration activities in SC No. 72 and SC No. 75 after the Security, Justice, and Peace Cabinet Cluster (SJPCC) in the administration of former president Rodrigo Duterte ordered the suspension of oil and gas exploration in the West Philippine Sea.
The DOE explained in a June 25 statement that among the reasons for the indefinite ban was China’s harassment of survey vessels.
If Marcos is unable to protect Forum Energy’s ships, Carpio warned that Filipinos will suffer “even higher energy costs than what they’re already experiencing today.” He stressed that the Malampaya Gas Field, the primary source of non-renewable natural gas to produce electricity in the country, is expected to be depleted in three to five years.
“The only possible replacement is Reed Bank. Without Reed Bank, the Philippines will have to import LNG – Liquified Natural Gas – to feed its gas-fired power plants in Luzon,” Carpio said.
According to the DOE’s Philippine Energy Plan 2020 to 2040, Malampaya is projected to dry up by 2027. If the country fails to address challenges in offshore exploration and liquefied natural gas development, the United States International Trade Agency said it “will face a huge energy crisis.” (See VERA FILES FACT SHEET: Four things you need to know about Malampaya)
Under the SC 72 work plan, Forum Energy Ltd. was supposed to complete its drilling in Recto Bank by 2018. However, it was forced to suspend work in 2014 when former president Benigno Aquino imposed a moratorium on all exploration activities in the West Philippine Sea amid tensions with China. The DOE lifted the force majeure imposition in October 2020 after the Philippines signed a joint oil and gas development agreement with China only to reimpose the suspension in April this year.
Last Oct. 17, Energy Secretary Raphael Lotilla agreed to declare a force majeure for SC 72 and 75 from April 6, 2022 until the indefinite suspension is lifted. This essentially frees both parties from their obligations under these contracts as a result of the moratorium.
Lotilla also agreed to compensate the two companies a total of $13.78 million in “recoverable costs” for the projects. The exploration period for both contracts were likewise extended “to the number of days … spent to prepare for the activities that were suspended.
