April 18, 2022
MANILA — A China Coast Guard (CCG) vessel tailed two ships hired by a Philippine-based firm to do a seismic survey in the West Philippine Sea earlier this month, Vietnamese maritime observer Duan Dang wrote last week in his newsletter South China Sea Brief.
Ship tracking data suggested that CCG vessel 4201 shadowed survey ship Geo Coral and its support vessel Mariska G in northwest Palawan where Service Contract (SC) 75 is located.
SC 75, which covers 6,160 square kilometers in the offshore northwest Palawan Basin, is operated by PXP Energy Corp., formerly Philex Petroleum Corp, which hired the two ships.
A Philippine government official confirmed the SC 75 incident to the Inquirer on the condition of anonymity due to the issue’s sensitivity.
The source said the CCG vessel monitored Geo Coral and Mariska G at SC 75 starting on April 4 but kept its distance and did not interfere with their activities until the ships left for El Nido on April 6. This was after the Department of Energy (DOE) suspended oil exploration activities in the area until the security cluster issues the “necessary clearance to proceed.”
PXP Energy in February announced plans to conduct a 3D seismic survey at SC 75, and to drill two appraisal wells over SC 72 at the resource-rich Recto (Reed) Bank through its subsidiary, Forum Energy Ltd.
SC 72, operated by Forum, spans 8,800 sq km of Recto Bank, located west of Palawan and southwest of the depleting Malampaya gas field. It is the site of the Sampaguita gas field, which is estimated to contain 2.6 trillion cubic feet of natural gas, according to PXP.
Both SC 75 and SC 72 are within the country’s exclusive economic zone, where the Philippines has sovereign or exclusive rights to exploit and explore resources.
DOE suspension order
In a company disclosure to the Philippine Stock Exchange last week, PXP and Forum said they received an order from the DOE on April 6 “to put on hold all exploration activities for SC 75 and SC 72 until such time that the SJPCC (Security, Justice and Peace Coordinating Cluster) has issued the necessary clearance to proceed.”
The DOE, in a letter disclosed by PXP Energy, said the SJPCC agreed that its approval was needed as a precondition in oil exploration activities “taking into consideration the political, diplomatic and national security implications of any activity in the West Philippine Sea.”
Both operators complied by suspending their respective activities although they told the DOE in a reply on April 8 that Geo Coral and its support vessels were already at SC 75 to start the survey activities, while Cassandra VI was on its way to SC 72 for a geographical site survey.
The two operators expressed willingness to resume operations immediately and no later than April 11, but said that without a go-signal from the DOE by April 10, they would consider the suspension order “to be indefinite and a force majeure event.”
No survey done
PXP and Forum ended up terminating all supply and service agreements for oil activities after failing to get word from the DOE to resume their operations “to mitigate losses arising from what now appears could be an indefinite suspension of exploration activities.”
Geo Coral and Mariska G also left for South Korea on April 12, without doing the scheduled survey, the Inquirer source said.
Defense Secretary Delfin Lorenzana, the SJPCC chair, did not respond to a request for comment.
Ironically, the DOE had recommended the lifting of the ban on oil and gas exploration in the West Philippine Sea to address the country’s energy security, which was approved by President Duterte in October 2020. It also issued “resume-to-work” notices to service contractors doing energy-related activities.
The moratorium was imposed in 2014 by then President Benigno Aquino III, due to rising tensions between the Philippines and China.
China claims the entire South China Sea, including the West Philippine Sea. The Philippines, China, Brunei, Vietnam, Taiwan and Malaysia have overlapping claims.
An international arbitral tribunal ruled in 2016 to invalidate Beijing’s historical claims through its fictional nine-dash line but it never recognized the ruling.
The DOE suspension order on April 6 came a month after President Duterte said in one of his late-night public addresses that someone “from China” reminded him of a supposed joint exploration deal in Recto Bank as there were reports of other firms’ planned activities there.
He added that the same person whom he did not identify warned him that China would send soldiers to the area should the Philippines deploy its military.
Matter of honor
“You should just abide by what was agreed upon before. I said it’s a matter of honor. There were consensual talks and a written agreement. If that is amended, it is dangerous,” the President said.
He also told the defense and military to follow the supposed joint exploration agreement with China when he presided over a joint Armed Forces of the Philippines and Philippine National Police command conference on April 6, according to a senior security official.
His statements were the reason why the security cluster was hesitant to issue a go-signal for the oil survey activities, the official told the Inquirer.
But there are no official joint agreements between the Philippines and China on joint exploration activities in the West Philippine Sea. Both only signed a memorandum of understanding (MOU) on joint oil and gas development in 2018 but no consensus has been reached yet.