1. 4 TH ROUNDTABLE DISCUSSION HOSTED BY THE IN COOPERATION WITH THEME “Philippine Offshore Oil and Gas industry: Prospects for Competition/ Cooperation” 28 February 2016 Astoria Plaza, Pasig City

2. PRESENTED BY: ATTY. RINO E. ABAD Energy Resource Development Bureau DEPARTMENT OF ENERGY

3. THE PHILIPPINES’ 16 SEDIMENTARY BASINS 1. Ilocos Shelf 2. Cagayan Basin 3. Central Luzon Basin 4. Bicol Shelf 5. Southeast Luzon Basin 6. Mindoro-Cuyo Basin 7. West Masbate-Iloilo Basin 8. Visayan Basin 9. Agusan-Davao Basin 10. Cotabato Basin 11. Sulu Sea Basin 12. East Palawan Basin 13. Southwest Palawan Basin 14. Reed Bank Basin 15. Northwest Palawan Basin 16. West Luzon Trough INSET MAP: see next slide 1 2 4 5 3 8 6 7 9 10 11 12 13 14 15 16 Source: PhilPRA, 2002

4. Bajo de Masinloc (Scarborough) WEST LUZON TROUGH Aerial extent: ~16,000 km 2 Aerial extent: ~16,000 km 2 Offshore component: 95% Offshore component: 95% NORTHWEST PALAWAN BASIN Aerial extent: ~36,000 km 2 Aerial extent: ~36,000 km 2 Offshore component: 95% Offshore component: 95% RECTO BANK BASIN Aerial extent: ~71,000 km 2 Aerial extent: ~71,000 km 2 Offshore component: 95% Offshore component: 95% SOUTHWEST PALAWAN BASIN Aerial extent: ~44,000 km 2 Aerial extent: ~44,000 km 2 Offshore component: 95% Offshore component: 95% PHILIPPINE SEDIMENTARY BASINS UNDERLYING THE WEST PHILIPPINE SEA Source: PhilPRA, 2002

5. Petroleum Resources of the Philippines Sedimentary Basin UndiscoveredDiscovered Oil million barrels Gas billion cubic feet Condensate million barrels Oil million barrels Gas billion cubic feet Condensate million barrels 1Ilocos Shelf---106--- 2Cagayan Basin292,061--- 2 3Central Luzon Basin---5,063--- 4Bicol Shelf---247--- 5Southeast Luzon Basin258242--- 6Mindoro-Cuyo Basin746342---25--- 7West Masbate-Iloilo Basin121--- 8Visayan Basin9031,995--- 3 9Agusan-Davao Basin59768--- 10Cotabato Basin84389--- 29--- 11Sulu Sea Basin1304051--- 12East Palawan Basin317703--- SUB-TOTAL2,52712,342125340 13Southwest Palawan Basin5494,529--- 14Reed Bank Basin342,2287.05--- 15Northwest Palawan Basin3505,46547.11433,806109 16West Luzon Trough---129--- SUB-TOTAL93312,35154.151433,806109 (PhilPRA, 2002) GT 3,46024,69355.151683,840109

6. Philippine Ranking on Proved Reserves OIL RankCountry Volume (billion barrels) 1Vietnam4.40 2Malaysia4.00 3Indonesia3.70 4Brunei1.10 5Thailand0.40 6Philippines0.17 NATURAL GAS RankCountry Volume (trillion cubic feet) 1Indonesia105.00 2Malaysia83.00 3Vietnam25.00 4Brunei14.00 5Thailand9.00 6Philippines3.80 Source: U.S. Energy Information Administration HOW TO IMPROVE: Increase exploration efforts on our petroleum basins

8. 1. Crude Oil Price Source: Indexmundi.com/tradingeconomics.com – Using Dubai Crude Price YEAR PRICE (US Dollar per barrel) 2012122.00 201540.00 201660.00 202075.00

9. 2. 2014 Philippine ranking on ease of doing business COUNTRYRANK Singapore1 st Malaysia18 th Thailand49 th Brunei84 th Vietnam90 th Philippines103 rd Source: World Bank Ease of Doing Business Report

10. 3. Stability of the Philippine Petroleum Service Contracts (SCs) a.Tañon Strait Service Contract Constitutional Challenge (SC 46); and b.Commission on Audit’s (COA’s) Notice of Charge for income tax/es improperly charged to the royalties of the government (SC 38) Source: Energy Resource Development Bureau - DOE

11. 4. West Philippine Maritime Dispute Dispute arising from China’s NINE-DASH LINE claim submitted to the United Nations on May 07, 2009 without explanation as to its legal basis nor to its fixed coordinates and whether the waters enclosed by it can enroach in the 200-nautical mile Exclusive Economic Zone (EEZ) of the Philippines in the West Philippine Sea. Source: Justice Antonio T. Carpio, “The South China Sea/ West Philippine Sea Dispute“. Published by Musictablet on November 04, 2015 at www.scribd.com

12. 4. West Philippine Maritime Dispute A. RAMIFICATIONS OF THE DISPUTE #1Half of the world’s seaborne trade passes through the South China Sea, valued at $ 5.3 trillion annually; Source: Justice Antonio T. Carpio, “The South China Sea/ West Philippine Sea Dispute“. Published by Musictablet on November 04, 2015 at www.scribd.com

13. 4. West Philippine Maritime Dispute #2The South China Sea dispute has the potential to overturn the United Nations Convention on the Law of the Sea (UNCLOS) – the “constitution” for the oceans and seas of our planet; Source: Justice Antonio T. Carpio, “The South China Sea/ West Philippine Sea Dispute“. Published by Musictablet on November 04, 2015 at www.scribd.com

14. 4. West Philippine Maritime Dispute #3China’s national boundaries under the NINE-DASH LINE will cause the following countries to lose:

15. Malaysia – about 80% of its EEZ in Sabah and Sarawak facing the South China Sea; Vietnam – about 50% of its total EEZ; Indonesia – about 30% of its EEZ facing the South China Sea in Natura Islands whose surrounding waters comprise the largest gas field in Southeast Asia; Philippines – about 80% of its EEZ facing the West Philippine Sea, including the entire Reed Bank (Recto Bank) and part of the Malampaya Gas Field. Source: Justice Antonio T. Carpio, “The South China Sea/ West Philippine Sea Dispute“. Published by Musictablet on November 04, 2015 at www.scribd.com

16. Area 7 Recto Bank Areas 8, 9, 10 & 11 West Luzon Exploration Phase (10) SCs 50, 54, 55, 57, 58 59, 63,72, 74 & 75 Production Phase (5) SCs 6, 6A, 6B, 14 & 38 WPS ACTIVE PETROLEUM SERVICE CONTRACTS (SCs) WPS AREAS OFFERED IN THE 5 th PHILIPPINE ENERGY CONTRACTING ROUND (PECR5) Source: Energy Resource Development Bureau - DOE

17. 4. West Philippine Maritime Dispute B. China’s intentions identified through its actions #1 China’s 2009 Note Verbale explaining the NINE-DASH LINE map; “China has indisputable sovereignty over the islands in the South China Sea and the adjacent waters and enjoys sovereign rights and jurisdiction over the relevant waters as well as the seabed and subsoil thereof.” Source: Justice Antonio T. Carpio, “The South China Sea/ West Philippine Sea Dispute“. Published by Musictablet on November 04, 2015 at www.scribd.com

18. 4. West Philippine Maritime Dispute #2China’s claims and reclamation affecting the Philippine claim under the UNCLOS: Seven reefs in Spratlys Reed (Recto) Bank; Scarborough (Panatag) Shoal Source: Justice Antonio T. Carpio, “The South China Sea/ West Philippine Sea Dispute“. Published by Musictablet on November 04, 2015 at www.scribd.com

19. 4. West Philippine Maritime Dispute #3 China’s continuous interference on Philippine upstream petroleum activities: SC 72 (Recto Bank) - On 02 March 2011, the Seismic Survey was temporarily stopped when two Chinese patrol vessels moved into the survey area; Source: Energy Resource Development Bureau - DOE

20. SC 14C1 (Northwest Palawan) - On 11 and 20 April 2014:a Chinese Vessel “XIANGYANGOHONG” approached almost (1.5) nautical miles of the Rubicon Intrepid (FPSO) Ship operating in the area; SC 55 (West Palawan) - On 07 August 2015, a gray “Chinese Warship” with ID No. 571 approached to approximately one (1) nautical mile of the Maersk Venturer Drill Ship operating in the area Source: Energy Resource Development Bureau - DOE

21. 4. West Philippine Maritime Dispute C. Philippine Government’s stand manifested by: #1Apparent consistency to the opinion that: Reclamations violate the 2002 ASEAN-China Declaration of Conduct which states that the parties undertake to exercise self-restraint: “refraining from action of inhabiting on presently uninhabited islands, reefs, shoals, cays and other features” Source: Justice Antonio T. Carpio, “The South China Sea/ West Philippine Sea Dispute“. Published by Musictablet on November 04, 2015 at www.scribd.com

22. 4. West Philippine Maritime Dispute #2 Filing of Arbitration Case – filed in January 2013, China’s claim of NINE-DASH LINE is considered to be unsupported by historical facts and violates the UNCLOS. Source: Energy Resource Development Bureau - DOE #3 Consistent and clear policy direction observed through the pronouncements of President Aquino to protect our maritime rights in the West Philippine Sea and the need to settle the dispute through peaceful means.

23. 4. West Philippine Maritime Dispute D. Petroleum Upstream Activities in the Philippines Therefore, will clearly be characterized to be: Open and competitive to everyone be it by individual or joint undertaking as long as the award shall be subject to the Philippine laws and contracting system. Source: Energy Resource Development Bureau - DOE END