MANILA (Reuters) - Philippine oil and gas firm PXP Energy Corp (PXP.PS) expressed eagerness on Thursday to resume exploration in the disputed South China Sea and said any joint venture development would likely involve a Chinese company.
Chairman Manuel Pangilinan told reporters he was looking to discuss plans to resume PXP’s stalled Reed Bank project in the hotly contested waterway with the Philippine government.
“We should start doing that because all of the pronouncements that appear to have been made by both China and the Philippines are moving in a positive direction,” he said.
The Philippines suspended exploration in the Reed Bank, known locally as Recto Bank, in late 2014 as it pursued international arbitration over territorial disputes with China.
Last year, the Permanent Court of Arbitration in The Hague invalidated China’s claim over most of the South China Sea, though the country has refused to recognize the ruling.
The ruling clarified Philippine sovereign rights to access offshore oil and gas fields, including the Reed Bank, within its 200 mile Exclusive Economic Zone.
PXP had been talking with China National Offshore Oil Corp (CNOOC) (0883.HK) about joint exploration and development of the Reed Bank during the administration of President Rodrigo Duterte’s predecessor, Benigno Aquino. But Manila’s move to seek arbitration disrupted the negotiations.
Both countries are now open to the idea of joint energy ventures in the disputed waters. China’s foreign minister voiced his support during a visit last week to the Philippines, adding that unilateral action could cause problems for both sides.
Such an arrangement would be extremely complex and sensitive as both countries claim the oil and gas reserves. Sharing them could be construed as legitimizing the other side’s claim, or ceding sovereign territory.
Last week, Duterte said a partner had been found for oil and gas exploration and development but gave no details.
Pangilinan said he had no idea who Duterte was referring to, but believed “the joint venture (partner) will likely be a Chinese company like CNOOC”.
“I’m not sure that a non-Chinese company, at least in the beginning, would be involved because (the project) is in the middle of a geopolitical issue between the Philippines and China,” he said.
PXP has a 70 percent interest through its Forum Energy subsidiary in the Reed Bank project, covered by a Philippine permit called service contract 72 (SC72). It has a 50 percent interest in a nearby project called SC75, which has also stalled because it is within the disputed area.
Duterte, who took power shortly before The Hague ruling, has said he will raise the landmark ruling with China eventually but first needed to strengthen relations between the two countries.
Editing by Martin Petty and David Clarke