Forum Energy To Continue Exploration In Disputed Reed Bank Prospect -Philex CEO
02/29/2012| 03:09am US/Eastern
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Forum Energy PLC (>> Forum Energy Plc) will continue exploring for oil in the Reed Bank in the South China Sea, an offshore prospect in an area claimed by both China and the Philippines, the company's controlling stakeholder said Wednesday.
Manuel Pangilinan, chairman and chief executive of Philex Mining Corp. (>> Philex Mining Corporation), whose petroleum unit owns 64.45% of Forum Energy, said the work program committed to the Department of Energy requires the U.K.-based company to conduct a wider seismic survey and drill up to two wells by June 2013.
"We intend to comply with that work program," Pangilinan told reporters after announcing Philex's 2011 results.
The Reed Bank is adjacent to the Spratly Islands, a group of small islands in the southern part of the South China Sea which are also claimed in all or part by Vietnam, Malaysia, Brunei and Taiwan.
Early last year, a survey ship hired by Forum Energy reported that two Chinese vessels in the area had threatened to ram it.
"It would be unfortunate if, because of the sovereignty issue, we can't develop the resources there. I do hope the sovereignty issue can be resolved," Pangilinan said.
The plan puts the Philippines and China on a collision course, as the Chinese government has made it clear that any non-authorized oil or gas exploration in the area would "complicate and magnify" the territorial dispute.
"China has indisputable sovereignty over the Nansha Islands and their adjacent waters," Chinese foreign ministry spokesman Hong Li said Tuesday, using the Chinese name for the islands.
"Without the Chinese government's permission, any country and any company's oil and gas activity in the waters under China's jurisdiction are illegal."
Forum Energy plans to spend $80 million to gather more seismic data in the coming months to upgrade existing leads and drill an exploratory well and an appraisal well.
Pangilinan didn't disclose an exact work schedule but said the Philippines' government has been informed.
Forum Energy has a contract to explore and develop oil and gas deposits in the Reed Bank, which the Philippines now refers to as Recto Bank to strengthen its territorial claim.
A 2006 seismic survey indicated a mean volume of 3.4 trillion cubic feet of gas-in-place and 440 million barrels of oil in the area.
-By Cris Larano, Dow Jones Newswires; 632-848-5051; cris.larano@dowjones.com
-- Carlos Tejada in Beijing contributed to this story.
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