Former DOE Official Advocates for 60-40 Revenue Split in WPS Joint Oil Exploration
Former Department of Energy (DOE) Undersecretary Atty. Jose Layug Jr. has strongly emphasized that any potential joint oil exploration between the Philippines and China in the West Philippine Sea (WPS) must strictly adhere to a 60-40% revenue sharing arrangement, with the Philippines receiving the larger share. According to the former energy official, the Philippines should remain open to joint exploration in the disputed maritime area, particularly given the nation's limited resources for conducting independent oil exploration in regions with significant petroleum reserves.
Legal Framework and Financial Considerations
Atty. Layug referenced Presidential Decree 87, which permits foreign companies to engage in oil drilling and testing within the country's natural gas deposits, provided that the foreign entity covers all associated costs. He explained that if oil is discovered, all exploration expenses would be deducted from the net revenue before implementing the 60-40 sharing scheme. This model, he noted, was previously applied in the Malampaya gas field project, ensuring a fair distribution of profits after cost recovery.
As an executive board member of the Philippine Energy Research and Policy Institute, Atty. Layug highlighted the substantial financial requirements for such ventures. He pointed out that constructing a single exploration well alone could cost up to $100 million, with no guarantee of immediate oil discovery. This underscores the necessity for a robust financial network to support comprehensive oil exploration efforts in the region.
Strategic Importance and National Interests
The insistence on the 60-40 revenue split is not merely a financial consideration but a strategic move to safeguard national interests. Atty. Layug argued that this arrangement ensures the Philippines maximizes benefits from its natural resources while mitigating the risks and high costs associated with exploration. By securing the majority share of net revenues, the country can fund further energy initiatives and bolster its economic stability.
This stance comes amid ongoing territorial disputes in the West Philippine Sea, where joint exploration could serve as a pragmatic approach to resource development without escalating conflicts. Atty. Layug's recommendations aim to balance cooperation with China against the backdrop of ensuring that the Philippines retains control over its economic gains from any collaborative efforts.
