South China Sea contract to be extended

FORUM ENERGY Plc will be granted a two-year extension of its contract for an exploration area located in a disputed part of the South China Sea, a Cabinet official yesterday said.

The firm, majority owned by Philex Petroleum Corp., has said it needs more time to drill appraisal wells called for under Service Contract (SC) 72, which will expire in August 2015.

“We will grant it. The usual two years [extension]. We don’t have any reason not to grant it,” Energy Secretary Carlos Jericho L. Petilla told reporters yesterday.

A meeting, “hopefully within this week or next week”, will be held with Forum Energy officials, he added.

Manuel V. Pangilinan, Philex Petroleum chairman, last month said that Forum Energy needed more time to conduct exploration work.

SC 72, granted by the Energy department in February 2010, upgraded a concession acquired by Forum Energy in April 2005. It includes an obligation to drill the wells by August 2011 but this was extended last year to August 2015 to avoid further inflaming a row with China, which claims most of the resource-rich South China Sea.

Mr. Pangilinan has said that rig mobilization will take around 12-18 months, so Forum Energy was looking to commence drilling activity in the Sampaguita gas field “sometime in the first or second quarter of 2016”.

Philex Petroleum holds a 60.49% interest in Forum Energy, which in turn holds 70% interest in SC 72.

Mr. Pangilinan also confirmed that Forum Energy was reviving talks on a possible partnership with China National Offshore Oil Corp. to develop the prospect.

Shares of Philex Petroleum shed one centavo or 0.14% to close at P7.10 apiece yesterday. -- Claire-Ann Marie C. Feliciano

source:  Businessworld