(First of two parts)
By Theresa Martelino-Reyes, VERA Files
A state-owned Chinese oil firm has rejected the proposal of business tycoon Manuel V. Pangilinan to invest in a contract to drill in the disputed Reed Bank but welcomed “innovative” proposals on how it can participate, according to a memorandum Pangilinan submitted to President Benigno Aquino.
State-owned China National Offshore Oil Corp. (CNOOC) turned down the offer made by Pangilinan, chairman and chief executive officer of Philex Petroleum Corp, in a meeting on May 2, 2012.
“A Farm-In Agreement into SC 72 (which Philex previously suggested to them) is not acceptable given the sovereignty issue,” Pangilinan reported to Aquino in an aide memoire submitted to the President on May 7, 2012. The contents of the aide memoire, obtained by VERA Files, have not been made public since it was submitted to the President.
SC 72 refers to Service Contract 72, signed in 2010, in which the Philippine government awarded Forum Energy Plc. (FEP) exploration rights to a basin within Reed Bank. Philex owns 64.45 percent of FEP, a London-based listed oil and gas exploration firm focused on the Philippines. FEP in turn owns 70 percent of SC 72.
A farm-in agreement is a contract signed between the owner of the “farm” and its exploration partner. Accepting such an arrangement could be interpreted as CNOOC accepting the Philippines as “owner” of Reed Bank.