PXP Energy ordered to halt operations of SC72, SC75
The Department of Energy (DOE) has ordered PXP Energy Corporation to put on hold its exploration activities, particularly for its Service Contract (SC) 72 and 75 blocks in the West Philippine Sea (WPS), “until such time that the Security, Justice, and Peace Coordinating Cluster (SJPCC) has issued the necessary clearance to proceed.”
In its disclosure to the Philippine Stock Exchange, the Manny V. Pangilinan-led firm said this was the first time it learned of such a clearance needed to proceed with its exploration activities, specifically following the lifting of the WPS exploration ban in October 2020.
“After PXP and Forum received the directive of the DOE to suspend exploration activities on 6 April 2022, both operators complied with this directive by suspending their respective activities,” PXP Energy said in the disclosure.
Forum (GSEC 101) Ltd., an indirect subsidiary of PXP Energy, operates SC72 in the Recto Bank within the WPS. SC75, meanwhile, is a joint venture between PXP (50%), government-owned PNOC-Exploration Corporation (35%) and Yuchengco-owned PetroEnergy Resources Corporation (15%)
“PXP and Forum, however, understood the suspension to be temporary considering that the DOE has been keen for exploration activities to be conducted since the DOE’s lifting of the Force Majeure on 14 October 2020; and both operators have been closely coordinating with the DOE regarding the planned exploration activities (which are part of their respective work obligations under SC 75 and SC 72),” PXP Energy added.
In a letter dated April 6 signed by Energy Usec. Donato Marcos, which PXP Energy attached in its disclosure, the DOE said the SJPCC took into consideration the “political, economic, and national security implications of any activity in the West Philippine Sea” in deciding that exploration firms should secure clearance first before proceeding.
The order is also “[for] strict compliance.”
PXP Energy, then, wrote the DOE two letters dated April 8, saying it was willing to resume exploration activities in both SCs 72 and 75 on Sunday or Monday at the latest. If no resume-to-work order was ordered, then the company “will consider the suspension of work issued by the DOE to be indefinite and a Force Majeure event that will entitle them to be excused from the performance of their respective obligations and to the extension of the exploration period under [SCs 72 and 75].”
The DOE has not handed down a return-to-work order, as of Monday afternoon, forcing PXP Energy to stand by its Force Majeure declarations and to “terminate with immediate effect all the supply and services agreements they have put in place to carry out the work obligations imposed by the DOE, to mitigate losses arising from what now appears could be an indefinite suspension of exploration activities.“Last February, Pangilinan said PXP Energy is drilling two appraisal wells within the SC72 block.