Reed Bank gas development in South China Sea hinges on foreign partnership

(Bloomberg) – A Philippine tycoon said partnering with China may be an option in the development of a new gas field in an area of the South China Sea where the two nations have competing maritime claims.

“My personal view is we should engage China,” PXP Energy Corp. Chairman Manuel Pangilinan told reporters on Wednesday. “Look at what Mark Carney did for Canada.”

Manila-listed PXP’s exploration work in the Reed Bank in the South China Sea has been on hold for years amid persistent tensions between Manila and Beijing over the resource-rich waterway that have led to clashes between their ships.

Pangilinan said PXP needs the expertise and capital if it were to proceed with the development of the Reed Bank. The company had estimated in 2014 that it would cost $6 billion to develop it, which PXP can’t afford, he said.

“Whether it’s China or somebody else, you have to partner with somebody who’s got the experience,” he said. “It’s a very complicated business.”

Pangilinan said he last met with representatives of state-owned China National Offshore Oil Co. in 2019, when the administration of former Philippine President Rodrigo Duterte pushed for joint oil and gas development in the South China Sea amid a broader effort to forge closer economic ties.

The Southeast Asian nation is working to secure its energy supply with the near depletion of its main Malampaya gas field. While the discovery last month of a new gas source in that area would help extend the dwindling field, the country would still need more energy sources to meet its growing power demand.

Pangilinan said his position on the matter has been relayed to the Philippine government, which he said has the final say. “It’s up to them, because this is all caught up in geopolitics. And that’s beyond our pay grade,” he added.