Manila firm’s gas discovery in South China Sea may fuel regional tension

April 24, 2012, Tuesday/ 15:35:00/ REUTERS

A natural gas discovery in a disputed area in the South China Sea contains more reserves than initially thought, a Philippine exploration firm said on Tuesday, with the new findings likely to further intensify territorial tensions between Beijing and Manila.

The Philippines' Philex Petroleum Corp said in a disclosure to the stock exchange that its Forum Energy Plc  has a report that "is expected to show an improvement in the resources previously known" in the Sampaguita gas discovery in the Reed Bank, which the government calls Recto Bank. Forum Energy had previously said that based on a 2006 study, the Sampaguita field had a potential of up to 20 trillion cubic feet of natural gas, or more than five times initial estimates. It was in the Reed Bank where Chinese navy vessels threatened to ram a survey ship hired by Philex in March last year, sparking tensions that almost halted Forum Energy's work in the area. But Philippine military officials advised the firm then to continue with their job. Philippine and Chinese ships remain locked in a standoff near the Scarborough Shoal in another part of the South China Sea for the third week running. The Philippines insists the Reed Bank is well within its territory and not part of the disputed Spratly Islands in the South China Sea, believed to be rich in oil and gas and is crossed by important shipping lanes. China claims ownership of the entire South China Sea, including the Spratlys which is claimed in whole by Taiwan and Vietnam and in part by Malaysia, Brunei, and the Philippines. Apart from the Sampaguita gas field, 15 other oil and gas exploration sites near the South China Sea are up for grabs, with the government expected to award exploration contracts in July as it seeks to reduce its reliance on oil imports, a senior energy company official said on Tuesday. Two of those 15 exploration sites are in areas being contested by China.

Energy Secretary Jose Rene Almendras said he was waiting for an official report from Forum Energy, but its findings could greatly lessen the dependence on imported fossil fuel. "Reading the statements, I cannot help but smile and be happy because if it's true and it's big, then hopefully the resources will help us face the need for energy in the future," Almendras said in an interview with local TV network ANC. Almendras said the Sampaguita gas discovery would support plans to build a multi-billion-peso pipeline that would bring the natural gas to industrial users in Manila. The Sampaguita gas field is near the Malampaya gas field, with about 2.7 trillion cubic feet of natural gas, and which supplies fuel to three power plants for the main Luzon island.

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