Philippines Says Gas from Disputed Field Should be Used Domestically


MANILA, Oct 23 (Reuters) – The Philippines will insist that any gas produced from an offshore field a unit of Philex Petroleum Corp hopes to develop with China's CNOOC Ltd be used domestically, a senior energy official said on Wednesday.

London-listed Forum Energy Plc, a unit of Philex, is holding talks with CNOOC, the Hong Kong-listed unit of China National Offshore Oil Company, for a possible joint venture to explore for oil and gas reserves in an area of the disputed South China Sea, a deal that may later lead to a production agreement, Energy Secretary Jericho Petilla said.

Service Contract 72 in the Reed Bank holds the Sampaguita field, which is estimated to have 20 trillion cubic feet of natural gas, dwarfing Malampaya, the Philippines' current sole gas producer with only about 2.7 tcf of gas.

"What I know is they are having regular meetings, that's the way to move forward," Petilla told reporters. "Certainly, we will not agree that it (the gas) will be sold elsewhere when we actually need it," he said.

Manila needs to find a replacement for the natural gas produced in the Malampaya field, which is expected to operate only until 2024, Petilla said.

Any deal would have to be reviewed by government lawyers, but Manila is open to an ownership structure of SC 72 similar to that of Malampaya, he said.

Malampaya is 90 percent owned by a consortium led by Shell Philippines Exploration B.V. of Royal Dutch Shell Plc and 10 percent held by a state agency.


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