London-listed Forum Energy Plc, which is majority-owned by Philex Mining Corp., is spending up to $88.5 million to explore oil and natural gas prospects in disputed waters covering resource-rich Recto Bank.
The Palawan Council for Sustainable Development (PCSD) confirmed that it had received and approved the UK firm’s exploration program.
However, Philex Mining, the controlling shareholder of Forum Energy, said it had yet to receive the formal approval for the project.
PCSD said it would issue a document called “clearance” to formally inform Forum Energy of the approval.
According to the approved program, exploration activities will take place in an area covering 880,000 hectares, located about 80 nautical miles from mainland Palawan. Exploration activities are estimated to cost anywhere from $48.5 million to $88.5 million.
Forum Energy would have to apply for a separate clearance if it plans to move on to production, PCSD said.
The UK-based firm has until Aug. 14, 2015, to implement the drilling and investment schedule in Recto Bank. On Jan. 28, 2013, the Department of Energy approved a two-year extension of the drilling and investment schedule.
Forum Energy has also obtained a certificate of non-coverage (issued in lieu of the Environmental Compliance Certificate) from the Department of Environment and Natural Resources as well as certification from the National Commission of Indigenous People.
Philex Mining, which is chaired by businessman Manuel V. Pangilinan, holds 64.45 percent of the issued capital of Forum through subsidiaries FEC Resources Inc. and Philex Petroleum Corp.
Energy Secretary Carlos Jericho L. Petilla had said that the Pangilinan group might continue commercial talks with state-owned China National Offshore Oil Corp. (CNOOC) on natural gas resources in the West Philippine Sea as long as territorial concerns were “untouched.” Petilla said it was additionally a matter of “survival” for the Philippines since natural gas production at Malampaya might run out by 2024.
Pangilinan, in turn, had said that talks with CNOOC (through Phoenix Petroleum) continued on “a very preliminary basis” but there was “nothing tangible” to report so far.
Forum Energy, whose first-half losses nearly doubled year-on-year, posted higher project expenses in the period due to delays in SC72. It gets revenue from other projects like the oil-producing Galoc field off northwest Palawan. Forum Energy has a 70-percent interest in SC72. Monte Oro Resources and Energy Inc., which is led by business tycoon Enrique Razon, owns the remaining 30-percent stake in SC72. Walter Brown’s A. Brown & Co. owns 11.4 percent of Monte Oro.
Both the Philippines and China are claiming sovereignty over the West Philippine Sea, which covers Recto Bank.