Aside from China, firms from US, Europe also keen on Recto Bank
MANILA, Philippines [UPDATED] - The controlling stakeholders of the consortium granted the right to drill and explore the massive gas deposits at Recto Bank is on the lookout for foreign partners -- not exactly from China alone -- before commercial activities commence in 2013.
Manuel V. Pangilinan, chair of Forum Energy that controls the Recto Bank consortium, said on Thursday, May 17, that it is "critical" that they find a foreign partner with technical expertise and deep pockets as 2013 nears. That's when commercial activities at the Recto Bank (also called Reed Bank) commence.
"Typically, a gas field will need a major expenditure with the help of international oil firms with the technical capability and financial resource of some size. It is important, if not critical, for us to partner one or more than one international oil companies. We recognize that we cannot do this on our own," he told reporters at the sidelines of the annual meeting of Forum's stockholder, Philex Peteroleum, on Thursday, May 17.
In the next phase of the Recto Bank drillings, Pangilinan-led Forum Energy and its Filipino partners have to shell out $75 million to explore the Sampaguita gas fields at Recto Bank as it fulfills the work program it had submitted to the Philippine government as required by their SC-72 franchise. As the end of the work program nears and in preparation for the start of commercial drilling, more investments are needed.
This was apparently what led to the meeting Pangilinan had with officials of state-owned China National Offshore Oil Corporation (CNOOC) a few weeks back.
He said, however, that no deal has been finalized with the Chinese firm nor any of the American and European firms they had talked to before.
"We have been approached a number of companies who have interest in SC-72 (Service Contract, or the license granted to them by the Philippine government). I think at this time there are no concrete arrangements that we can speak of," he said.
Carlo Pablo, the president of Forum Energy stockholder and Pangilinan-led Philex Petroleum, said the other firms that expressed interest in partnering with them are "American and European companies."
Typical arrangement among companies involved in the capital intensive oil and gas activities is a farm-in agreement with another party that contributes in the finning, development and production process in exchange for a share of profits.
Talks, disputes with China
Pangilinan previously admitted that he had met with officials of CNOOC amid an ongoing territorial sea spat between the governments of the Philippines and China.
While diplomatic and trade relationships between the two countries area remain strained -- especially with the weeks-long stand off at the Scarborough Shoal, and the travel advisory and fruit exports bans imposed by China against the Philippines -- the talks between the camps of Pangilinan and the Chinese state-owned firm have been considered as a commercial solution to the dispute.
"I’m not sure if you could characterize it into talking with them (CNOOC). We certainly had that meeting in Beijing about 3 weeks ago," Pangilinan said.
"They’ve (CNOOC) expressed their interest in SC-72," he said, reiterating his previous statements.
However, he did not provide details of the talks. "Those were discreet discussions. We’d like to keep them discreet."
"CNOOC is one of the largest companies in China. It is one of the 3 state-owned companies in China. If I recall correctly, CNOOC revenues last year were about 250 billion renminbi and profits of 67 billion renminbi," he said.
When asked if the territorial and trade disputes were taken into account during these talks with the Chinese firm, he replied that commercial aspect of the gas deposits at Recto Bank was the common denominator.
"I cannot predict the political situation there but if -- speculative if -- they are a state-owned enterprise in China, so I’m assuming the political aspects would be at the background," he said.
"I believe that their main interest in the commerciality of the deposits. Our main interests us business people is the commerciality to determine whether it’s a commercial quantity, the deposits there are valid," he stressed.
"We tend to abstract that they are state-owned. [We] satisfy ourselves with their interest in SC72 and of course their technical and financial capability from the looks of it, they have those resources," he said.
He stressed that CNOOC has the capabilities needed for a natural gas project like Recto Bank.
On May 9, CNOOC launched its first home-grown deep-water drilling rig operating at a depth of 1,500 meters.
China, dependent on oil imports to fuel its surging economy, claims full sovereignty on the sea, which has huge oil and gas reserves, often leading to diplomatic rows with its neighbors. - Rappler.com
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