Joint oil and gas explorations to be held with China in disputed waters

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The Philippines has identified two areas in the South China Sea where joint oil and gas exploration might be undertaken with China — one in disputed waters.

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The two countries have agreed to set up a panel to work out how they can jointly explore the contested waters without having to address the vexed issue of sovereignty.

President Duterte’s spokesman, Harry Roque, said the areas under consideration were sites covered by service contracts 57 and 72 — exploration permits issued by Manila’s energy ministry.

“What I know is that there are two areas being considered for joint exploration, but both are within the exclusive economic zone of the Philippines”, he said.

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China claims almost the entire South China Sea, believed to rich in energy reserves and marine resources. Brunei, Malaysia, Vietnam and Taiwan also have claims.

The 880,000-hectare SC-72 at the Reed Bank, a disputed area, is where PXP Energy Corp has previously undertaken exploration.

In 2016, the Philippines won a case at the Permanent Court of Arbitration in The Hague, which invalidated China’s claim to sovereignty over most of the South China Sea, and also made clear the Reed Bank was inside the Philippines’ exclusive economic zone. China did not take part in the tribunal, and does not recognise its ruling.

Since Reed Bank is disputed, Roque said “there must be an agreement before the two countries can proceed with the joint exploration”.

The Philippine energy ministry suspended exploration in the Reed Bank, also known as Recto Bank, in 2014 as the government pursued the arbitration case. This disrupted PXP Energy’s plan to drill two wells. This came after Chinese boats harassed a survey ship in 2011.

PXP is eager to resume exploration in the Reed Bank but said any joint venture would likely involve a Chinese company.

PXP had been talking with China National Offshore Oil Corp about Reed Bank during the administration of President Aquino, but the arbitration disrupted negotiations.

In September, the Philippines said it was pursuing a long-delayed oil and gas exploration project with the Chinese corporation and a Canada-listed company in the SC-57 area, which is outside disputed waters.

The area lies near the country’s main oil and gas fields, including Malampaya, Nido, Cadlao and Matinloc.

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