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(FECOF)Philex Petroleum eyes Recto Bank development
THURSDAY, 26 APRIL 2012 21:14 PAUL ANTHONY A. ISLA / REPORTER
PHILEX Petroleum Corp. is willing to partner with any global oil-and-gas exploration firm in developing Recto Bank under Service Contract 72.

Manuel V. Pangilinan, Philex Mining chairman, told reporters in an interview.

Service Contract 72 covers 880,000 hectares and is located in the Recto Bank Basin, which is within the 200-nautical-mile EEZ based on Republic Act 9522, or the Philippine Archipelagic Baselines Law, signed on March 10, 2009. There had been numerous oil searches in the Reed Bank in the past under the Philippine contractual regime and Presidential Decree 87. The first petroleum contract in the area was awarded by the then-Ministry of Energy in 1975.

The development of Recto Bank, which is projected to have as much as 16.612 trillion cubic feet (TCF) of gas, could cost billions of dollars. A reputable and experienced oil-and-gas company would also be needed to develop it.

“The ideal partner should be someone with the expertise and marketing power to sell the gas [from the Recto Bank]. Because even if you have all the money in the world, to whom would you sell the gas? We’ve talked to a number of them already,” Pangilinan said.

He made it clear, however, that they have yet to finalize a deal with those they have talked with. “We haven’t gotten to that point yet, so it could be one company or more than one. But certainly we have to partner to with an international oil major or even a consortium,” he added.

Malacañang said the natural gas discovery on Recto Bank—which it stressed is Philippine territory—would be good for the country, since it would provide a new source of energy to fulfill domestic needs.

Presidential Spokesman Edwin Lacierda made the statement in a news briefing, responding to the survey results published by Weatherford Petroleum Consultants on behalf of Forum Energy Plc.

“Certainly it will be another source of energy for us and natural gas is cheaper than gas so it’s going to be good for us….It will definitely help us in our energy needs,” Lacierda said.

Barring any pressure from the Recto Bank’s other claimants, Pangilinan said they plan to stick to the work program they have submitted to the Department of Energy (DOE).

Pangilinan said this includes the drilling of appraisal and exploratory wells in the area. “And in the near future, we will be requesting for bids for oil rigs. I can’t be quite specific as to the timing, as it’s politically sensitive,” he added.

Pangilinan said he does not discount the possibility of a delay because of the political concerns between Philippine and Chinese governments. “If Chinese gunboats appear in the horizon, then there could be delays as those rigs and survey ships are owned by other countries that would not want to get involved in any kind of regional conflicts,” he said.

Pangilinan said the need for additional security will depend on how the government views the situation.

For their part, according to Pangilinan, they submitted a work program to the DOE as well as the probable scheduling of any survey ships that could be around the area and certainly a drilling rig.

“I think the matter of security is up to the government, we just want to make sure that our schedules and work programs are coordinated with them, so any security arrangements they can procure. In the event of any delay, we would have to seek the DOE’s forbearance, since it is not our fault,” he added.

Philex Mining, through its interests in FEC Resources Inc. and Philex Petroleum, control 64.45 percent of the share capital of Forum Energy Plc. In terms of gross prospective resources, Weatherford Petroleum Consultants reported that the Recto Bank is estimated to have a low of 4.666 TCF, a high of 16.612 TCF and a best estimate of 8.799 TCF of gas. The report said the disputed territory could also have a low of 117 million barrels, a high of 416 million barrels and a best estimate of 220 million barrels of oil and what it called liquids in place.?

Prospective resources refer to quantities of oil and gas estimated on a given date to be potentially recoverable from undiscovered accumulations, which are technically and economically viable to recover.

While in terms of contingent resource, Weatherford added that the Recto Bank have a low of 1.474 TCF, a high of 2.603 TCF and a best estimate of 4.598 TCF of gas. The report added that the area could have a low of 37 million barrels, a high of 115 million barrels and a best estimate of 65 million barrels of oil and what it also called liquids in place.

?Robin Nicholson, Forum chairman, said the Weatherford report showed an improvement in the resources previously known and supports the case to proceed with a drilling program.

“We will continue discussions with our major shareholders, our joint venture partner and our advisors to determine how the SC 72 drilling program, which we anticipate will cost a total of $75 million, will be funded,” Nicholson said.

Lacierda was also asked if there were concerns that China may impede Philippine efforts to develop the new gas find, since China is claiming that Recto Bank is part of its territory under the nine-dash line theory it introduced in 2009.