MANILA, Philippines -- The controversy now generated by the 2005 Joint Marine Seismic Undertaking (JMSU) among Spratlys claimants China, the Philippines and Vietnam has brought to light two oil and gas concessions that a UK-based firm is developing in the disputed area with the help of two powerful Filipino groups each led by the De Venecias and businessman Ricky Razon.

Reports posted on its website said the UK-based firm Forum Energy plc (Forum) had found partners in these Filipino groups to explore and extract oil and gas from sites in the Reed Bank in southern Palawan and another site in northwestern Palawan that had been confirmed to hold huge deposits of gas and, possibly, oil.

Updates posted by Forum on its projects in the Philippines said that on March 29, 2006, it completed its purchase of Filipino company Basic Petroleum and Minerals Inc. (BPMI).

On the same day, BPMI?s name was changed to Basic Petroleum Corp. (BPC), and Oscar de Venecia and Jose ?Joey? de Venecia III, brother and son, respectively, of the former Speaker, Pangasinan Rep. Jose de Venecia, were elected to its board of directors.

Joey de Venecia did not reply to text messages seeking his comment on the oil and gas exploration project, but a source close to him said the exploration agreement covering the Spratlys was one of the major irritants in the relationship between the De Venecia father and son.

The source, who requested anonymity because of the sensitive nature of the subject, refused to elaborate.

The former Speaker has repeatedly declared support for the JMSU and denied allegations that it was tied to billions of dollars in loans from China.

Already in the area

Jose Raymund Apostol, president of Forum Energy Phils. Corp., said in a press statement that when the JMSU was signed on March 14, 2005, Forum was already in the area conducting exploration work under Geophysical Survey and Exploration Contract No. 101 (GSEC 101) issued by the Philippine Department of Energy (DOE).

According to Apostol, the area covered by GSEC 101 is not in the disputed territory but falls within the Philippines? 200-nautical-mile exclusive economic zone delineated by Presidential Decree 1599.

The JMSU was signed by representatives of the national oil firms of the Philippines, China and Vietnam. Eduardo Mañalac, then president of the Philippine National Oil Co., signed on behalf of the Philippine government.

The signing ceremony at the Makati Shangri-La hotel was witnessed by then Speaker De Venecia, then Energy Secretary Vince Perez, Foreign Undersecretary Sonia Brady, then Chinese Ambassador to Manila Wu Hongbo and Vietnamese Ambassador Dinh Tich.

Apostol said the signatories later paid a courtesy call on President Macapagal-Arroyo in Malacañang.

But he posed the question: ?Do they have the written authority [from Ms Arroyo] to sign the agreement??

?Greater prize?

In its website, Forum said it had bought BPMI?s assets off northwestern Palawan, ?a prolific oil-producing area.?

It said oil fields in the area owned by BPMI?identified as Nido and Matinloc??continue to provide cash flow.?

Another oil field, Galoc, is scheduled for production this year, Forum said.

But Forum considers another oil- and gas-rich area near Palawan, the Reed Bank, as a ?greater prize.?

On Aug. 20, 2007, Forum said it had entered into a ?Heads of Agreement? with Filipino firm Monte Oro Resources and Energy (Monte Oro) to proceed with extracting gas and oil from a site at the Reed Bank that was confirmed to contain at least 3.4 trillion cubic feet of gas and potentially 440 million barrels of oil.

The agreement was expected to lead to a service contract that would allow Forum to proceed with extracting the gas contents of the Reed Bank site.

But according to Apostol, the bid has run into delays with the Philippine government.

Sister company

A sister company of Monte Oro, Monte Oro Grid Resources Corp., recently won a bidding for the National Transmission Co. (Transco) and is partly owned by Razon, reputed to be one of the most influential Filipino businessmen by virtue of his close relationship with the First Couple.

Monte Oro?s key role, according to Forum, is to help in obtaining a service contract from the DOE.

?This partner brings a wealth of local experience which will assist in developing Forum?s business while providing welcome Philippine participation in a major local resource,? said Forum?s updates on the Reed Bank project.

Under the deal, ?Monte Oro will assist in obtaining all regulatory approvals for the conversion of GSEC 101 into a service contract.?

?Tremendous potential?

Forum described GSEC 101 as ?an area with tremendous potential.?

Under the Forum-Monte Oro deal, the Filipino joint venture is to earn 7.5 percent of gross proceeds of all production from the Reed Bank site.

Apostol said that should Forum acquire the service contract to start extracting gas from Reed Bank, the Philippine Constitution would relegate the company to the role of a mere contractor.

He said the Philippine government was entitled to 60 percent of the income from the planned gas extraction.