PXP Energy firming up $6-B investment for Recto Bank gas prospect

By Myrna M. Velasco – July 27, 2019
from Manila Bulletin

PXP Energy Corporation is firming up to US$6.0 billion worth of investments from the time it is finally allowed to resume exploration activities at the Recto Bank and that is up to the extent when the portended gas discovery merits commercial development.

At the estimated scale that could match the size of the Malampaya field, PXP Energy Chairman Manuel V. Pangilinan said the magnitude of investment will be huge and the company itself would not be able to pursue that without deep-pocketed as well as technically equipped partner.

“We’re estimating anywhere between US$4-billion to US$6-billion investment requirements to develop the gas field,” he stressed. By far, that is anchored on assumptions that there will eventually be commercial gas deposits that can be extracted from the block.

Pangilinan is of course cognizant of present realities that PXP Energy may not still be able to carry out extended seismic survey or drillings at the Recto Bank, because Service Contract 72 had been among those covered by the oil and gas exploration moratorium because of the lingering diplomatic tussle with China.

He thus noted that he agrees with President Rodrigo Duterte’s stance that the two governments must first agree on a mutually acceptable joint exploration framework before resumption of drilling activities at the so-called conflict areas.

In the end, he stated that the ‘joint deal’ with China may be beneficial even to the local players who have been sorting out partnership with Chinese companies in their oil and gas exploration ventures.

PXP Energy, for one, had been in talks with China National Offshore Oil Corporation (CNOOC) for the Recto Bank upstream oil and gas venture – but both parties can only move forward with the imprimatur of both governments and upon lifting of the moratorium by the Department of Foreign Affairs (DFA) for the diplomatically strained petroleum blocks.

“If we’re just speaking from the perspective of PXP Energy, we don’t have the expertise – we’re up to point only on survey and the initial drilling. Beyond that, we don’t have the expertise nor the funding for a size similar to gas at Malampaya,” Pangilinan stressed.

He added that “it’s difficult, PXP is too small, so we have to have partners to do the work and CNOOC is one of them.”

Pangilinan further opined that given the circumstances of the local upstream petroleum players and the foreign affairs-related issues at the West
Philippine Sea, the best way out would still be an agreement between the Philippines and Chinese governments. “We always believe that given the political dynamics of the situation there, some arrangements have to be reached with China. He (Duterte) is right that there got to be some arrangement with China,” he stressed.