Davao businessman Dennis Uy is setting his sights next on oil and gas exploration ventures at the West Philippine Sea, primarily at the Recto Bank area, which is currently under exploration moratorium because of the country’s diplomatic tussle with China.

Dennis Uy - Dennis Uy eyeing oil/gas exploration in conflict-ridden West Philippine Sea
Dennis Uy

During DOE’s opening of bids on September 14, Uy’s Udenna Energy Corporation submitted tenders for Areas 7 and 8 of the nominated blocks under the Philippine Conventional Energy Contracting Program (PCECP).

The specified areas are in Recto Bank which is in Northwest Palawan basin – the fringes of which are part of the nine-dash line claim of China; hence, the Department of Foreign Affairs (DFA) previously ordered stoppage of petroleum exploration activities in these jurisdictions until such time that the two countries can sort out a mutually acceptable joint exploration framework for such kind of investments.

The other offers cornered by the DOE were from Troika Giant Power Corporation for nominated area No. 5 in the Mindoro-Cuyo basin; and then from PXP Energy of businessman Manuel Pangilinan in nominated area No. 6 which is also in the West Philippine Sea.

For Uy’s company, this is the first time that it will be taking its plunge into upstream oil and gas exploration venture – one that will kick off from seismic survey to full scale exploration activities.

Udenna purchased the 45-percent stake of American energy giant Chevron in the Malampaya project, but it entered that business while the field is already on its full production capacity – in fact, it is already nearing the end of its commercial service contract cycle.

For the recently submitted PCECP offers, the DOE indicated that the applications from the interested parties complied with all the requirements. But the bids are still subject to post-qualification and final evaluation processes.

The energy department earlier stated three of the nominated blocks straddle “conflict areas” in the West Philippine Sea, but the Philippine government invokes rightful ownership on these territories, thus, that prompted the DOE to start offering oil and gas blocks in these areas.

Energy Secretary Alfonso G. Cusi admitted that initial resistance has been posed by China, because of its nine-dash lime claims at the disputed territory, but he said the Philippine government insists “that is ours,” hence, it has the legal authority over the blocks being offered under the petroleum contracting round.

The energy chief qualified though that the two countries continue to dialogue on how they can find an amicable solution to the proposed “joint exploration activities” in these diplomatically strained territories.

“For us at DOE, we want to proceed because the country needs it for energy security. The department is pushing for it,” Cusi said, while emphasizing that they continue to entice investors to look at the blocks on offer.

The submission deadline for offers to Areas 5, 6, 7 and 8 were initially scheduled in May 5 and 8 this year, but given the enforcement of lockdowns because of the coronavirus pandemic, the tendering process had to be deferred this September.

Nomination of a preferred block by an investor is one mode of investing in the country’s oil and gas sector, as underpinned by the PCECP designed by the Duterte administration. The other is scheduled bidding for pre-determined areas (PDAs), which the DOE had undertaken last year.

For service area nomination, this could be done year-round, as long as the interested party will subject its nominated petroleum block to a 60-day challenge period as prescribed under the PCECP rules.

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