MVP group firm on gas drilling plan

The group of businessman Manuel V. Pangilinan is committed to the drilling work program at the Recto Bank prospect under a gas exploration concession agreement with the Philippines, which is embroiled in a territorial dispute with China in the West Philippine Sea.

Philex Petroleum is a majority investor in UK-registered Forum Energy Plc., which has a 70-percent interest in service contract 72 (SC72). Included in this contract area is the Sampaguita gas discovery in offshore Palawan.

Forum Energy has set a $75-million drilling program for SC72, which is believed to have resources much bigger than the Malampaya gas field.

Pangilinan, who chairs Philex Petroleum, said there was “no definite date yet” to start the drilling program but noted that the group was unlikely to start by September. This month is historically the window for exploration firms to conduct drilling programs in the Philippines given its weather patterns.

However, he said the group was committed to have at least two appraisal wells by August next year as committed under the concession.

Eventually, Pangilinan said the group would have to bring in foreign partners into the concession. “It depends on the results of all the seismic and drilling work and the extent to which financial resources are required. So if it’s significant, yes [we will bring in foreign partners because] definitely we don’t have the expertise in terms of commercial operations,” he said.

Pangilinan’s group has entered discussions with China’s state-owned China National Offshore Oil Corp. (CNOOC) on a potential partnership subject to a framework acceptable to both the Philippine and Chinese governments.

As First Pacific Co. Ltd., the controlling stockholder in PXP’s parent firm Philex Mining, has been based in Hong Kong for quite some time, the group has indicated that it was comfortable working with the Chinese. However, Pangilinan had said that the group would walk away if any partnership would infringe on Philippine sovereignty.

For Philex Mining, Pangilinan said that in the aftermath of the issuance of a new executive order on mining, the company was still looking at its options for its three projects. But at the very least, he said Philex would be able to proceed with the Boyongan portion.

Philex Mining’s Silangan project has three parts. The portion comprising the Boyongan and Bayugo deposits is covered by a mineral production sharing agreement (MPSA 149-99-XIII) and an exploration permit (EP-XIII-03) and is located at the province of Surigao del Norte, according to the company’s website. There is also the Kalayaan mining project, which is a 60-40 joint venture with Manila Mining, with Philex having the controlling stake.

“We’re practically done with respect to our exploration work for both Boyongan and Bayugo. Now with the new EO, we’re not certain if it may affect the development of Bayugon and Kalayaan,” Pangilinan said, adding, “We can proceed with Boyongan.”

Philex is hoping to obtain a Financial or Technical Assistance Agreement (FTAA) license—which allows a foreign corporation to legally own and control a majority stake in large-scale mineral resources in the Philippines—for all three properties.

“Among the three, Boyongan has the most significant resources. We’re trying to see when we can proceed with that,” Pangilinan said.

The three provisions in the mining EO that stock analysts deemed as most critical were the extension of the moratorium on new mining agreements until Congress has passed new revenue-sharing laws; the instruction to the Department of Interior and Local Government and provincial governments to make ordinances consistent with national laws; and the performance review and possible renegotiation of existing mining contracts and licenses.