OREANDA-NEWS. April 16, 2014. Philex Mining Corp. and China National Offshore Oil Co. Ltd. have temporarily shelved talks over the joint development of the gas-rich Recto Bank in South China Sea, an area claimed by both Manila and Beijing.

Philex Mining chairman Manuel Pangilinan said negotiations between the two companies had stopped and that there were no plans to revive the talks soon.

Philex Mining owns 64.45 percent of Forum Energy Plc, which holds a 70-percent interest in Service Contract 72, including Recto Bank.  CNOOC is an upstream oil and gas firm owned by the Chinese government.

“We have not heard from them in a few months… Well, I guess by default. There is no communication to that effect.  The communication just died down,” Pangilinan said.

He said there were no plans yet to revive the talks with CNOOC. “For a moment, there’s no plan. We are busy for some other matters,” he said.

Pangilinan earlier expressed hope about forging an agreement with CNOOC that would pave the way for exploratory drilling at SC 72, which covers an 8,800-square kilometer area west off Palawan. SC 72 is estimated to contain as much as 16.6 trillion cubic feet of gas and 416 million barrels of oil.

“We would hope to do that...reach a commercial basis to further exploratory and drilling work on the concession but further subject to approval of their government and 416 million barrels of oil.

“We would hope to do that...reach a commercial basis to further exploratory and drilling work on the concession but further subject to approval of their government and our government,” Pangilinan said earlier.

Pangilinan also said having CNOOC as a partner could defuse the political tensions hounding SC 72.

“I cannot predict the political situation, but if, and if, that is a speculative if…They are a state-owned clearly identified with China, so I’m assuming the political aspects would recede in the background,” Pangilinan said.

Pangilinan said Forum was keen on developing SC 72, but security issues under the territorial dispute prevented them from doing so.

He said Forum wanted to conduct exploratory drilling “as soon as possible,” or once the security issues were addressed.

 Forum Energy’s work program called for the drilling of two exploratory wells until August 2015.

“We are a Philippine contractor so we are bound by Philippine law so we cannot do that if we do not conform to Philippine laws. We have to recognize Philippine sovereignty,” Pangilinan said.