Stop WPS oil exploration as a deterrent to investment

REUTERS

Of Kyle Aristophere T. Atienza, reporter

ECONOMIC and marine experts warned on Wednesday that the government’s decision to halt oil exploration activities in parts of the South China Sea claimed by the Philippines would make companies reconsider their investments in the region.

They issued the warning after the listing firm PXP Energy Corp. has been ordered by the Department of Energy (DoE) to suspend its exploration activities under its Western Philippine Sea (WPS) service contracts pending approval from a cabinet cluster overseeing diplomatic and national security concerns.

“Other service providers saw what happened to PXP, which already has a long-term contract and the best prospects for development. If the Philippines still isn’t willing to commit to the contract, I expect those other contractors to think twice,” Jay L. Batongbacal, a marine expert from the University of the Philippines, said in a Viber message.

Mr Batongbacal said potential investors in the country’s energy sector are likely to reconsider offshore oil exploration and other related investments in the WPS.

“They will either move to other countries if they don’t have other areas, or try to switch to other energy investments unrelated to oonwardsShore Petroleum if they can,” he said. “There is no point in wasting time and money on contracts that are not even implemented.”

The Defense Department order came a month after President Rodrigo R. Duterte said in a public address that the country had no choice but to stick to a purported joint exploration agreement with China to avoid conflict. He said someone from Beijing reminded him of the alleged agreement after learning of some companies’ planned activities in the disputed area.

“If the next government reflects the position of the current one, I wouldn’t be surprised if contractors decide to back out,” said Mr Batongbacal, who previously claimed China is “seriously intent on preventing any petroleum exploration and development by the Philippines.” in their own waters.

He said the Philippine government bottleipbottleThe approval of the exploration project in the WPS is a sign that it strongly supports China’s demands.

“The economy would find it difficult to capitalize on this,” said John Paolo R. Rivera, an economist at the Asian Institute of Management, in a Viber message. “The Philippines must simultaneously capitalize on its legal victory and relationship with China.”

In 2020, the DoE, with the approval of Mr. Duterte, issued a Notice of Resumption of Work to the service providers conducting oil exploration in the areas of Service Contracts (SC) 59, 72 and 75. PXP operates under SC No. 75 while its subsidiary Forum Energy Ltd. under SC no. 72 operated.

Mr. Duterte’s spokesman, Jose Ruperto Martin M. Andanar, said recently that the DoE has already requested a re-examination of the suspended oil exploration activities.

“Current and potential investors on these issues will certainly look to the next administration for policy clarity since they cannot rely on preliminary, changing decisions on these concerns,” said Terry L. Ridon, chairman of the infrastructure and infrastructure committee Investment think tanks InfraWatchPH.

Citing an arbitration ruling that rejected China’s claim to more than 80% of the sea based on a 1940s map, Mr Ridon said exploration activities should continue within the WPS as it is within the territorial sea and exclusive economic zone of the country.

“This has been confirmed by the Hague judgment, which recognizes our rights over these waters, including disputed waters.”

The experts called on the Philippine government to draw up a contingency plan that would be enforced should Beijing become more aggressive in the region due to Philippine government-led exploration activities.

Local media previously reported that two vessels hired by PXP for a seismic survey in the WPS were tailed and overshadowed by a Chinese Coast Guard vessel earlier this month.

“It is long past the time for the government to have contingency plans for this type of activity in WPS,” Mr Batongbacal said, noting that the presence of Chinese ships and possible interventions “should already be considered and planned for, even beforehand.” ”

“The government’s response to the PXP incident shows that they are not planning at all,” he said.

Mr Batongbacal said the next government should not only allow exploration activities to resume in the area “but stand ready to protect the survey to ensure it is carried out”.

“The Philippines should act with confidence and be ready to call China if it becomes more aggressive,” he said. “She should not be afraid to exercise her rightful and legitimate rights.”

Meanwhile, Gerry C. Arances, executive director of the Center for Energy, Ecology and Development, reminded the government that it must reconsider any oil exploration given its pledge to drastically reduce the country’s greenhouse gas emissions.

“On the one hand, the cessation of oil exploration in the Western Philippine Sea is welcome for the energy transition demanded by the climate crisis,” he said, noting that the International Energy Agency has made it clear over the past year that there will be no new gas and oil field development in early 2021 be allowed if the country still wants to keep the net-zero ambitions for 2050 possible.

“If the ban on oil exploration is instituted as a permanent response to the need for decarbonization, rather than as a product of intimidation by foreign powers, we would send a signal that the Philippines, as a sovereign nation, is consciously turning its attention to clean energy over oil and other fossil fuels fuels and will welcome investment as such.”

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