Monday, 22 February 2010

GSEC 101 not within contested Spratlys, says energy chief

Paul Anthony A. Isla
Business Mirror
http://www.businessmirror.com.ph/index.php?option=com_content&view=article&id=22135:gsec-101-not-within-contested-spratlys-says-energy-chief&catid=33:economy&Itemid=60

ALLAYING fears that its recent action could stir a diplomatic dispute between the Philippine and Chinese governments over the Spratlys, the Department of Energy (DOE) on Friday defended that the area under Geophysical Seismic Exploration Contract (GSEC) 101 is within the country’s limits and not within the contested island group.

In a press conference, Energy Secretary Angelo Reyes said the GSEC 101 contract area, which was recently converted to Service Contract (SC) 72 and operated by London-based Forum Energy Plc., is within the 200-nautical- mile Exclusive Economic Zone (EEZ) of the Philippines.

“If it’s within the EEZ, then the government [through the DOE] has the authority to engage in the exploration, development and utilization of natural resources and enter into any kind of arrangement in areas within its limits or borders,” said Reyes.

He added that Forum Energy has completed its four-year committed work program under the GSEC 101, which was granted to it in July 2002.

Reyes said upon approval and completion of the work program, it was agreed that Forum Energy’s GSEC 101 would be converted into a regular service contract.

And before their four-year work program expired, according to Reyes, Forum Energy had already applied for the conversion of GSEC 101 and even submitted a seven-year work program for exploration under a regular service contract.

“Forum Energy had fulfilled its obligations under the GSEC 101 to the satisfaction of the DOE and even spent about $5 million,” Reyes said.

The energy chief noted that SC 72 will have a contract period of seven years during which Forum Energy has to work and complete the commitments under the work program it has submitted to the DOE.

Based on Forum Energy’s study, the project will entail spending $100 million to set up several drilling wells and around $15 million to $20 million to commission drilling rigs.

In 2007, Forum Energy said it had already raised $20 million from investors, with its parent company publicly listed at the London Stock Exchange.

Forum Energy, a London-based oil-exploration company that finally got the clearance from the DOE to start drilling in the South China Sea, earlier said its exploration contract known as GSEC 101 is not in the Spratlys.

Forum Energy said GSEC 101, recently converted to SC 72, has a coverage of 880,000 hectares and is located in the Reed Bank Basin, at least 150 kilometers east of the Spratlys and is closer to Palawan.

It added that SC 72 is within the 200-nautical-mile EEZ based on Republic Act 9522, or the Philippine Archipelagic Baselines Law, signed on March 10, 2009.

There had been numerous oil searches in the Reed Bank in the past under the Philippine contractual regime and Presidential Decree 87. The first petroleum contract in the area was awarded by the then-Ministry of Energy in 1975.

The following year, the first of seven wells was drilled. Over 6,000 kilometers of 2D seismic data and some 250 sq km of 3D seismic data have been acquired both by foreign and Filipino companies in these explorations.

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