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4 TH ROUNDTABLE DISCUSSION HOSTED BY THE

4 TH ROUNDTABLE DISCUSSION HOSTED BY THE. IN COOPERATION WITH. THEME “Philippine Offshore Oil and Gas industry: Prospects for Competition/ Cooperation”. 28 February 2016 Astoria Plaza, Pasig City. Philippine Offshore Oil and Gas Interests in the West Philippine Sea. PRESENTED BY:

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4 TH ROUNDTABLE DISCUSSION HOSTED BY THE

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  1. 4TH ROUNDTABLE DISCUSSION HOSTED BY THE IN COOPERATION WITH THEME “Philippine Offshore Oil and Gas industry: Prospects for Competition/ Cooperation” 28 February 2016 Astoria Plaza, Pasig City

  2. Philippine Offshore Oil and Gas Interests in the West Philippine Sea PRESENTED BY: ATTY. RINO E. ABAD Energy Resource Development Bureau DEPARTMENT OF ENERGY

  3. THE PHILIPPINES’ 16 SEDIMENTARY BASINS 2 1 Ilocos Shelf Cagayan Basin Central Luzon Basin Bicol Shelf Southeast Luzon Basin Mindoro-Cuyo Basin West Masbate-Iloilo Basin Visayan Basin Agusan-Davao Basin Cotabato Basin Sulu Sea Basin East Palawan Basin Southwest Palawan Basin Reed Bank Basin Northwest Palawan Basin West Luzon Trough INSET MAP: see next slide 4 3 16 5 15 6 14 7 8 13 9 12 10 11 Source: PhilPRA, 2002

  4. PHILIPPINE SEDIMENTARY BASINS UNDERLYING THE WEST PHILIPPINE SEA Bajo de Masinloc (Scarborough) • WEST LUZON TROUGH • Aerial extent: ~16,000 km2 • Offshore component: 95% • NORTHWEST PALAWAN BASIN • Aerial extent: ~36,000 km2 • Offshore component: 95% • RECTO BANK BASIN • Aerial extent: ~71,000 km2 • Offshore component: 95% • SOUTHWEST PALAWAN BASIN • Aerial extent: ~44,000 km2 • Offshore component: 95% Source: PhilPRA, 2002

  5. Philippine Ranking on Proved Reserves HOW TO IMPROVE: Increase exploration efforts on our petroleum basins Source: U.S. Energy Information Administration

  6. PRESENT AND EMERGING CHALLENGES

  7. 1. Crude Oil Price Source: Indexmundi.com/tradingeconomics.com – Using Dubai Crude Price

  8. 2. 2014 Philippine ranking on ease of doing business Source: World Bank Ease of Doing Business Report

  9. 3. Stability of the Philippine Petroleum Service Contracts (SCs) • a. Tañon Strait Service Contract Constitutional Challenge (SC 46); and • b. Commission on Audit’s (COA’s) Notice of Charge for income tax/es improperly charged to the royalties of the government (SC 38) Source: Energy Resource Development Bureau - DOE

  10. 4. West Philippine Maritime Dispute Dispute arising from China’s NINE-DASH LINE claim submitted to the United Nations on May 07, 2009 without explanation as to its legal basis nor to its fixed coordinates and whether the waters enclosed by it can enroach in the 200-nautical mile Exclusive Economic Zone (EEZ) of the Philippines in the West Philippine Sea. Source: Justice Antonio T. Carpio, “The South China Sea/ West Philippine Sea Dispute“. Published by Musictablet on November 04, 2015 at www.scribd.com

  11. 4. West Philippine Maritime Dispute A. RAMIFICATIONS OF THE DISPUTE #1Half of the world’s seaborne trade passes through the South China Sea, valued at $ 5.3 trillion annually; Source: Justice Antonio T. Carpio, “The South China Sea/ West Philippine Sea Dispute“. Published by Musictablet on November 04, 2015 at www.scribd.com

  12. 4. West Philippine Maritime Dispute #2The South China Sea dispute has the potential to overturn the United Nations Convention on the Law of the Sea (UNCLOS) – the “constitution” for the oceans and seas of our planet; Source: Justice Antonio T. Carpio, “The South China Sea/ West Philippine Sea Dispute“. Published by Musictablet on November 04, 2015 at www.scribd.com

  13. 4. West Philippine Maritime Dispute #3China’s national boundaries under the NINE-DASH LINE will cause the following countries to lose:

  14. Malaysia – about 80% of its EEZ in Sabah and Sarawak facing the South China Sea; • Vietnam – about 50% of its total EEZ; • Indonesia – about 30% of its EEZ facing the South China Sea in Natura Islands whose surrounding waters comprise the largest gas field in Southeast Asia; • Philippines – about 80% of its EEZ facing the West Philippine Sea, including the entire Reed Bank (Recto Bank) and part of the Malampaya Gas Field. Source: Justice Antonio T. Carpio, “The South China Sea/ West Philippine Sea Dispute“. Published by Musictablet on November 04, 2015 at www.scribd.com

  15. WPS ACTIVE PETROLEUM SERVICE CONTRACTS (SCs) • Exploration Phase (10) • SCs 50, 54, 55, 57, 58 • 59, 63,72, 74 & 75 • Production Phase (5) • SCs 6, 6A, 6B, 14 & 38 WPS AREAS OFFERED IN THE 5th PHILIPPINE ENERGY CONTRACTING ROUND (PECR5) • Area 7 • Recto Bank • Areas 8, 9, 10 & 11 • West Luzon Source: Energy Resource Development Bureau - DOE

  16. 4. West Philippine Maritime Dispute B. China’s intentions identified through its actions #1China’s 2009 Note Verbale explaining the NINE-DASH LINE map; “China has indisputable sovereignty over the islands in the South China Sea and the adjacent waters and enjoys sovereign rights and jurisdiction over the relevant waters as well as the seabed and subsoil thereof.” Source: Justice Antonio T. Carpio, “The South China Sea/ West Philippine Sea Dispute“. Published by Musictablet on November 04, 2015 at www.scribd.com

  17. 4. West Philippine Maritime Dispute • #2China’s claims and reclamation affecting the Philippine claim under the UNCLOS: • Seven reefs in Spratlys • Reed (Recto) Bank; • Scarborough (Panatag) Shoal Source: Justice Antonio T. Carpio, “The South China Sea/ West Philippine Sea Dispute“. Published by Musictablet on November 04, 2015 at www.scribd.com

  18. 4. West Philippine Maritime Dispute • #3China’s continuous interference on Philippine upstream petroleum activities: • SC 72 (Recto Bank) - On 02 March 2011, the Seismic Survey was temporarily stopped when two Chinese patrol vessels moved into the survey area; Source: Energy Resource Development Bureau - DOE

  19. SC 14C1 (Northwest Palawan) - On 11 and 20 April 2014:a Chinese Vessel “XIANGYANGOHONG” approached almost (1.5) nautical miles of the Rubicon Intrepid (FPSO) Ship operating in the area; • SC 55 (West Palawan) - On 07 August 2015, a gray “Chinese Warship” with ID No. 571 approached to approximately one (1) nautical mile of the Maersk Venturer Drill Ship operating in the area Source: Energy Resource Development Bureau - DOE

  20. 4. West Philippine Maritime Dispute C. Philippine Government’s stand manifested by: #1Apparent consistency to the opinion that: Reclamations violate the 2002 ASEAN-China Declaration of Conduct which states that the parties undertake to exercise self-restraint: “refraining from action of inhabiting on presently uninhabited islands, reefs, shoals, cays and other features” Source: Justice Antonio T. Carpio, “The South China Sea/ West Philippine Sea Dispute“. Published by Musictablet on November 04, 2015 at www.scribd.com

  21. 4. West Philippine Maritime Dispute #2Filing of Arbitration Case – filed in January 2013, China’s claim of NINE-DASH LINE is considered to be unsupported by historical facts and violates the UNCLOS. #3Consistent and clear policy direction observed through the pronouncements of President Aquino to protect our maritime rights in the West Philippine Sea and the need to settle the dispute through peaceful means. Source: Energy Resource Development Bureau - DOE

  22. 4. West Philippine Maritime Dispute • D. Petroleum Upstream Activities in the Philippines • Therefore, will clearly be characterized to be: • Open and competitive to everyone be it by individual or joint undertaking as long as the award shall be subject to the Philippine laws and contracting system. END Source: Energy Resource Development Bureau - DOE

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