THE Department of Energy (DOE) said Thursday it would honor the 60:40 Filipino-foreign ownership requirement of the 1987 Philippine Constitution insofar as oil and gas exploration activities with China, if any, are concerned.
DOE Undersecretary Felix William Fuentebella said that while both countries continue to “explore what kind of treaty or agreement we can come up with,” the Philippine government is bound by the provisions of the Constitution.
“If we can move forward, yes. But we have to follow our Constitution. Our governments are talking. We can talk to you, but our rules will be limited by the provision of the Constitution…If we follow the Philippine Constitution, we can apply the current 60-40 arrangement, which we also apply to other nations or contractors,” said the DOE official.
The Constitution provides that Filipinos must own majority or 60 percent of a company while limiting foreign ownership to 40 percent.
The moratorium on oil and gas exploration has been lifted in the West Philippine Sea (WPS). Thereafter, the Chinese foreign minister said China and the Philippines have reached consensus on joint exploration of oil and gas resources in waters disputed in the South China Sea.
The lifting of the moratorium effectively allows private firms to resume exploration activities.
Pangilinan-led PXP Energy Corp., which holds a 78.98-percent operating interest in Service Contract (SC) 72 or the contract to explore Recto Bank in the West Philippine Sea through London-listed Forum Energy Plc., said it “will take guidance” from the Philippine government insofar as foreign partners for the exploration project is concerned. PXP was supposedly going to partner with China National Offshore Oil Corporation, one of the largest national oil companies owned by the People’s Republic of China.
Other SCs previously affected by the moratorium include SC 54 operated by Nido Petroleum Philippines Pty. Ltd.; SC 58 and SC 59 operated by PNOC Exploration Corp.; and SC 75 also operated by PXP Energy.
Last week, the Department of Energy (DOE) said it has endorsed to the Office of the President the awarding of three new Petroleum Service Contracts (PSCs) located in the WPS.
However, the agency has yet to release details of the three contracts.
But the agency said operators of SCs 54, 58 and 59 sought suspension of work activities amid the Covid-19 pandemic. For SC 72, the DOE said the operator is set to drill exploratory wells next year while the SC 75 group is scheduled to conduct exploratory activities.
DOE Secretary Alfonso Cusi said his office is consistently monitoring the progress of each project to ensure that the service contractors’ commitments are being fulfilled.
Cusi said these activities are concrete and explicit forms of the enforcement of sovereign rights consistent with real gains in the South China Sea arbitral award.
Under the United Nations Convention on the Law of the Sea, petroleum licensing is the most important sovereign right of a coastal state like the Philippines. With the lifting of the moratorium in the WPS, the service contractors are obliged to comply with approved work commitments in their respective areas.