Philex open to tie-up with any group for Recto Bank

MANILA, Philippines - Philex Petroleum Corp., which controls London-listed Forum Energy Plc., is open to partnering with anyone that can help exploit the potential resources of the Recto Bank, which lies near the disputed Spratly Islands.

“We’re open to anyone that can help us develop the gas field,” said Manuel V. Pangilinan, chairman of Philex Petroleum, as he underscored the need to accelerate oil exploration activities in the Sampaguita gas field or Service Contract 72.

Forum (through its 100-percent interest in Forum Philippine Holdings Ltd. and Forum (GSEC101) Ltd.) holds a 70-percent equity in the SC 72 licence, which covers an area of 8,800 square kilometers. Philex Mining Corp. (through its interests in FEC Resources Inc. and Philex Petroleum Corp.) controls 64.45 percent of Forum.

Pangilinan was earlier criticized for considering a possible partnership with Chinese offshore oil producer CNOOC to develop the Sampaguita gas discovery in the disputed waters amid the tension with China, which has warned the Philippines not to underestimate its capability in defending its sovereignty and territorial integrity with respect to the South China Sea.

China maintains that the waters around the island have been a traditional Chinese fishery.

The Philippines, on the other hand, insists that the Scarborough Shoal is within its 200-nautical mile exclusive economic zone (EEZ) based on the UN Convention on the Laws of the Sea (UNCLOS).

The dispute over the island intensified in April when a Philippine coast guard ship and two Chinese maritime surveillance vessels faced off near the Spratly Island, which is believed to contain huge oil and gas deposits.

Pangilinan emphasized that Philex Petroleum needs to hook up with a foreign company, which has the expertise and the money to speed up the development of the Sampaguita gas field.

Last month, Forum Energy revealed that the latest seismic survey on its offshore prospects in the Recto Bank showed the prospective resources could reach as high as 16.612 trillion cubic feet for natural gas and 416 million barrels for oil. The area is now believed to have 3.4 trillion cubic feet of gas and potentially 440 million barrels of oil - said to be bigger than the existing Malampaya gas field off Palawan.

Forum Energy is hopeful the increase in the amount of resources will win support of its shareholders for a plan to drill within the year a well in the Sampaguita gas field, which is expected to cost around $75 million.

Philex earlier provided a financing facility worth $10 million that enabled Forum to progress the development of Service Contract 72.

Pangilinan said the group is sticking with its work program with the government. “The sooner we start, the better,” he said.

The second phase of the SC 72 drilling will start before June.

Energy Secretary Jose Rene Almendras earlier said resources in the Recto Bank could last for about 100 years.