Manuel V. Pangilinan, Philex Petroleum chair, said the firm is prepared to drop the planned tie up if the two governments involved cannot resolve the sovereignty issue.
“We will not impinge on the sovereignty of the government. We are not pushing the case recklessly,” he told reporters on the sidelines of the firm’s annual stockholders’ meeting.
Philex Petroleum owns 60 percent of Forum Energy Plc., the company in charge of the survey of the Reed Bank area as part of service contract 72.
Philex Petroleum had said that it is in discussion with China National Offshore Oil Corp. (CNOOC) for a potential partnership for the exploration and development of the Reed Bank prospect.
CNOOC is China’s biggest offshore oil and gas producer, earlier reports show.
“We’re finalising the terms to ensure that the inputs are acceptable to our government,” Pangilinan said.
“We still have to iron out many details about the [partnership]… but there are two cardinal points we’re taking seriously in the course of our drafting of our inputs: the legal and commercial terms,” he said.
“The government has made this very clear to us, and we have assured them that we will comply with this. Any arrangement must conform to the local law, first and foremost,” he said.
Pangilinan also added that the commercial terms of the possible joint venture must also be deemed acceptable to Philex.
“Of course, we have to think about our business as well,” he said.
Service contract 72, which covers an area of 8,800 square kilometers west of Palawan, is estimated to have a prospective gas potential of 8.79 trillion cubic feet and 220 million barrels of oil.
It has a contingent reserve of 2.6 trillion cubic feet of gas and 65 million barrels of oil.