* Area 7 block falls in disputed Reed Bank area of South
* Area 7 estimated to hold 165 mln barrels of oil, 3.5 tcf
By Erik dela Cruz
MANILA, May 9 The Philippines on Friday launched
a tender for exploration rights in 11 oil and gas blocks,
including one in a disputed area of the South China Sea that is
likely to fuel further tension with China.
China claims virtually all of the South China Sea and is
already involved in a dispute with Manila over a Chinese fishing
boat that was seized this week in the Spratly Islands on
suspicion its crew was poaching protected turtles species.
Beijing is also in the middle of a stand-off over an oil rig
it has moved into waters claimed by Vietnam.
Philippine energy officials sought to downplay the issue of
territorial dispute with China in offering to investors the
so-called Area 7 in Reed Bank - or Recto Bank as it is known in
the Philippines. The Area 7 block, like the rest of the South
China Sea, is believed to hold huge oil and gas deposits.
Manila calls the South China Sea the West Philippine Sea.
"The area we are offering in the West Philippine Sea is very
near Palawan," Energy Undersecretary Ramon Allan Oca told
Reuters, referring to the southwestern Philippine province.
The area is also near the Malampaya offshore natural gas oil
field operated by a local unit of Royal Dutch Shell.
"From the point of view of the Philippines, it is not a
disputed area," Oca said. "Area 7 is within the Philippines'
exclusive economic zone."
China, the Philippines and Vietnam, along with Malaysia,
Taiwan and Brunei, all claim parts of the South China Sea.
It was in the Reed Bank where a 2011 confrontation between
Chinese navy vessels and a survey ship contracted by
London-listed Forum Energy Plc - a unit of Philippine
exploration firm Philex Petroleum Corp - led to a halt
in oil and gas exploration work in the Sampaguita block.
Area 7, according to the Philippines' Department of Energy
(DOE), holds an estimated resource potential of 165 million
barrels of oil and about 3.5 trillion cubic feet (tcf) of
natural gas. Water depths range between 800 and 1,700 meters.
"As we live within international laws, we seek all
diplomatic recourse to assert our claims to the areas in the
West Philippine Sea," Energy Secretary Carlos Jericho Petilla
told potential investors in a speech at the launch of the 5th
Philippine Energy Contracting Round.
The Philippines is also offering 15 blocks for coal
exploration, which Petilla said are all within the country's
Most of the oil and gas exploration blocks are located near
the Philippines' main island of Luzon, while most of the coal
blocks are in southern Philippine provinces. Ten of the 11 oil
and gas block on offer are offshore.
Interested investors have until February next year to decide
which oil and gas or coal areas they want to bid for.
Petilla said three potential areas for petroleum exploration
have been "temporarily" excluded from the list of blocks offered
because they fall within areas covered by a peace deal signed in
March between the government and the Moro Islamic Liberation
Front, the country's largest Muslim rebel group.
Forum Energy holds Service Contract 72 issued by the
Philippine government covering the Sampaguita block in the Reed
Bank. The block is estimated to have 20 tcf of natural gas, much
bigger that Malampaya's estimated reserves of 2.7 tcf.
Forum Energy has yet to resume work in the area after the
earlier shipping dispute involving the Chinese navy.
(Reporting by Erik dela Cruz; Editing by Tom Hogue)