Pangilinan eyes more partners in West Philippine Sea gas exploration

Manny Pangilinan. INQUIRER file photo

HONG KONG—Businessman Manuel V. Pangilinan plans to expand the consortium undertaking gas exploration in the Recto Bank, which is part of the territory disputed by the Philippines and China, to “internationalize” and “de-politicize” the concession area while boosting the financial and technological muscle for the project.

While Philippine-based Philex Petroleum Corp. (PXP) is preparing to work with state-owned China National Offshore Oil Corp. (CNOOC) on this project subject to a framework acceptable to both the Philippine and Chinese governments, Pangilinan said in an Earth Resources Conference organized by Standard Chartered Bank that the project may be big enough to take in one or two more foreign partners.

The West Philippine Sea (South China Sea) dispute, Pangilinan said, would not deter PXP’s exploration work with respect to Service Contract 72 (SC72). Pangilinan said that as First Pacific Co. Ltd., the controlling stockholder in PXP’s parent firm Philex Mining, had been based in Hong Kong for quite sometime, the group was comfortable working with the Chinese.

After previously meeting with Chinese officials and CNOOC, Pangilinan said: “The Chinese made it very clear to us that if were able to set aside the sovereignty issue, they will be prepared to deal with commercial interests.”

He added, “we could come up with a template for development in disputed areas.”

But Pangilinan said his group had made it clear to both the Philippine and Chinese governments that they were neither qualified nor authorized to talk about sovereignty issues. “We’re here as businessmen,” he said.

Broadening the consortium beyond PXP and CNOOC, Pangilinan said, was necessary because of the large cost and technical capability involved in gas exploration.

“We really need someone with experience and technology, someone who has done it before like CNOOC, Shell or Exxon Mobil,” Pangilinan said. “We really need a foreign partner to develop the gas field so I guess the most logical is a Chinese company.”

There are three of such prospective partners from China but Pangilinan noted that it was Beijing who would usually “designate” the “future bride” and that  was how his group got hooked up with CNOOC.

But moving forward, Pangilinan said, “I think we’d like to enlarge the consortium beyond Philippine company – ourselves (at) Philex Petroleum, CNOOC. If the size of the field is big enough, I think it’s capable of admitting one or two more international partners.”

“The other advantage of that is that it internationalizes, de-politicizes the project. If it’s just the Philippines and China, it looks like it’s not only a commercial but a political one, so it’s best if there’s one or two more non-Chinese, non-Filipino (partners) involved,” he said.

Asked about how soon CNOOC and PXP could come up with clearer framework, Pangilinan said there’s a desire on the part of both parties to move forward. He said the Chinese were asking for basic inputs that would pave the way for a basic agreement but he told them that he would clear those inputs with the Philippine government.

“The discussions are quite discreet, confidential and delicate but the ball is in our court,” Pangilinan said. “They said at the moment neither your country nor my country benefits from the potential gas field and anything higher than zero is better than zero.”

Asked about the prospective timeframe, Pangilinan said that based on personal experience, one can’t put a calendar when working with governments. “I hope we can move as quickly as we could, find out (the resources), because if there’s no gas there, what are we talking about?”

PXP owns 64.45 percent of Forum Energy plc which has a 70 percent interest in SC72.

Forum Energy is traded and listed on the alternative investment market of the London Stock Exchange.

The remaining 30 percent stake in SC72 is owned by Monte Oro Resources and Energy Inc., which is led by businessman Enrique Razon. Brown’s A. Brown & Co. owns 11.4 percent of Monte Oro.

Razon had earlier criticized Pangilinan’s discussions with the Chinese for prospective partnership in SC72.