PXP Energy Corp. said Monday it put on hold exploration activities over Service Contract 72 and SC 75 in the West Philippine Sea until all the clearances are issued by government agencies.
PXP said in a disclosure to the stock exchange it received a directive from the Department of Energy on April 6 to “put on hold all exploration activities for SC 75 and SC 72 until such time that the Security, Justice and Peace Coordinating Cluster has issued the necessary clearance to proceed.”
PXP is the operator of SC 75, while Forum Energy Limited where PXP holds a majority interest is the operator of SC 72.
PXP said this was the first time that it learned about the requirement for a clearance from the SJPCC before undertaking the work obligations that the DOE required them to do in SC 75 and SC 72, respectively.
“Nevertheless, after PXP and Forum received the directive of the DOE to suspend exploration activities on 6 April 2022, both operators complied with this directive by suspending their respective activities,” it said.
PXP and Forum were hoping the suspension would be temporary considering that the DOE was keen on resuming exploration activities following the lifting of the force majeure on West Philippine Sea exploration on Oct. 14, 2020.
Both operators said they were closely coordinating with the DOE on the planned exploration activities and expressed willingness to resume their exploration plan immediately, but said they have not received written confirmation from the DOE by April 10. This compelled them to consider the suspension of work issued by the DOE to be “indefinite and a force majeure event that will entitle them to be excused from the performance of their respective obligations and to the extension of the exploration period under SC 75 and SC 72.”
“To date, PXP and Forum have not received advice from the DOE that they can resume their exploration activities. Thus, they have been constrained to stand by their force majeure declarations and to terminate with immediate effect all the supply and services agreements they have put in place to carry out the work obligations imposed by the DOE, to mitigate losses arising from what now appears could be an indefinite suspension of exploration activities,” PXP said.
PXP holds 50-percent interest in SC 75, while Forum Energy Limited where PXP holds a direct and indirect interest of 79.13 percent, has a 70-percent participating interest in SC 72 in northwest Palawan.
The DOE previously welcomed the start of PXP’s oil exploration program in its service contract as it is seen to help support the country’s energy security. “As you know we have lifted the unilateral moratorium exploration in WPS and we had issued service contracts for the exploration. I’m happy that SC 72 they’re going to start their exploration and in fact they are already acquiring the vessel,” Energy Secretary Afonso Cusi said earlier.
PXP was set to drill two appraisal wells in Sampaguita gas discovery which has an estimated gas in place of 3.4 trillion cubic feet.
PXP chairman Manuel Pangilinan, who was previously skeptical of drilling operations in the West Philippine Sea amid territorial dispute with China, said that with the spike in world oil prices, there was a need to secure the Philippines’ own indigenous resources and not rely on foreign suppliers.
