Among the areas in the South China Sea, Reed Bank is the most promising area for oil and gas exploration. Reed Bank/Recto Bank is said to contain most of the oil and natural gas in the South China Sea. For that, China is not keen on giving their claim to the area without participation in the exploration. Chinese coast guard has been patrolling the area intimidating Philippine ships.
To solve the Chinese dilemma, it was proposed that a Chinese state-owned company, China National Offshore Oil Corp. (CNOOC), be brought on board as a partner in the Reed Bank exploration anyway the local operator will need foreign partner to fund exploration and development of the gas field just as what happened in Malampaya. Funds and technical expertise from Shell and Chevron were brought-in to develop the Malampaya gas field.
Manny Pangilinan (MVP) has been in negotiation with the Chinese since 2012 but yield no results. MVP led Hong Kong based-First Pacific owns an effective economic interest of 42.4% in PXP Energy. Forum Energy Ltd. holds a 70% interest in Service Contract 72 covering Reed Bank. PXP Energy has a 67.19% controlling interest in Forum Energy Plc with 48.76% held directly and 18.43% held indirectly through FEC Resources, Inc., a 54.99%-owned subsidiary.
PXP Energy has disclosed to the Stock Exchange the following:
PXP confirms that, as referred to in the DOE Press Release, there are ongoing negotiations between Forum (GSEC 101) Ltd, a subsidiary of Forum, and CNOOC relating to the implementation of the Memorandum of Understanding on Cooperation on Oil and Gas Development between the Government of the Republic of the Philippines and the Government of the People’s Republic of China dated 20 November 2018, but the parties are yet to agree on any disclosable definitive agreement. Hence, to date there are no disclosable information in respect of such ongoing negotiations, including the existence of such ongoing negotiations itself.
While a deal with CNOOC has eluded MVP for years, Dennis Uy (DU) was able to seal one with CNOOC involving Phoenix Petroleum in relation to natural gas developments in the country.
DU through his private holding company Udenna Corp., which has been a recipient of loans from Chinese banks, was able to acquire 45% of the Malampaya gas project from Chevron and is set to acquire another 45% of Malampaya gas project from Shell, the Malampaya gas project operator. Malampaya and Reed Banks are adjacent fields.
PXP Energy led Forum Energy may be the controlling interest in SC 72 but won’t be able to do anything on SC72 unless it will be able to bring CNOOC to the project.
CNOOC and its Filipino partner bringing capital and technical capabilities could enter and farm-in SC72 taking a controlling interest in the project. Most likely it could be DU through Udenna Corp. who will be able to partner with CNOOC and farm-in SC 72 for a controlling stake.
DITO has advances to Udenna Corp. and at some point in time Udenna Corp. might pay the advances with interests in assets such as Dito Telecommunity, the third telco, and interests in Malampaya gas projects including if it will happen stake in SC 72.

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