MANILA (REUTERS) - The Philippine government has suspended all exploration work at the Reed Bank in the South China Sea "until further notice", a unit of Philex Petroleum Corp said, as the country pursues international arbitration over territorial disputes.
London-listed Forum Energy Plc, which is 60.49 per cent owned by Manila-listed Philex Petroleum, said in a statement the Department of Energy had declared force majeure on its Service Contract 72 (SC72), the exploration permit covering the Reed Bank. "Under the terms of the force majeure, all exploration work at SC72 is immediately suspended until the DOE notifies the company that it may commence drilling," Forum said.
China claims nearly all of the South China Sea, while the Philippines and Vietnam, along with Malaysia, Taiwan and Brunei, claim parts of it.
Manila has said arbitration is the only route to achieving a just and durable solution to disputes over the South China Sea. It opposes China's contention that a United Nations court has no jurisdiction to hear a complaint.
Last year, Forum obtained approval from the DOE to extend its drilling plan at the Reed Bank by one year until Aug 15, 2016.
Forum has a 70 per cent interest in SC72, an oil and gas exploration permit covering the Sampaguita natural gas prospect in the Reed Bank, which Manila calls Recto Bank, located near the western Philippine island of Palawan.
A UN tribunal may rule on the arbitration case early next year, according to the Department of Foreign Affairs.
Territorial disputes between the Philippines and China have hampered Forum's plan to drill two appraisal wells at the Reed Bank. Appraisal wells are drilled to assess the size of gas or oil discoveries.
In 2011, Chinese patrol vessels almost rammed a Forum-contracted survey ship in the disputed waters.
The Sampaguita gas prospect is believed to have reserves of as much as 20 trillion cubic feet, based on initial estimates.