Philippines advised to further diversify its energy sources

By Victor V. Saulon
Sub-Editor

AUSTIN, TEXAS — Over-reliance on one type of energy or dependence on one country as an energy source is a threat to national security, an official of the US Department of State said here, as he pointed to alternative models of resource development that the Philippines can adopt.

“We think that it’s better for the country when you have the best choice of all of the different companies to look at — to look at the bids, to look at the offers — and then make the best choice for the country’s development and for the development of whatever resource you’re talking about,” Kent D. Logsdon, principal deputy secretary of the Bureau of Energy Resources (ENR), said in a briefing.

Mr. Logsdon was responding questions from visiting journalists from countries in Asia and Europe where the bureau hopes for greater engagement. ENR leads the State department’s efforts to forge its international energy policy to boost US and global energy security.

“We know there are lots of countries out there, several in particular, with state-owned enterprises who are very aggressive and who will come in with a checkbook,” he said.

He pointed to China and concerns from the United States about resource development models that offer terms to countries in the region, particularly those with territorial claims in the South China Sea, that center on joint exploration between a Chinese state-owned enterprise and a local company.

“We find that troubling,” Mr. Logsdon said.

He said the United States has been clear about its stand that the South China Sea is an international open waterway.

“US companies and other international companies should also be free to operate there. We continue to make that very clear, I think, in both word and deed. So we talked to China and we talked to countries in the region to say that,” he said.

For the United States, national security is threatened when its allies lack reliable access to diversified, affordable and reliable energy; foreign energy markets shut out US companies; market-based energy solutions are hindered by poor governance; competition for energy leads to conflict; or terrorists and rogue regimes exploit energy resources to fund violence and destabilizing activities.

ENR serves as the principal advisor of the Secretary of State on energy security, policy, operations and programs. As opposed to domestic concerns of the US Department of Energy, the bureau’s focus is more international.

Mr. Logsdon said the bureau works with governments in setting an enabling environment for companies to do business fairly.

“Sometimes, a state-owned enterprise might win a competition, but if it’s a fair and open competition, that’s what companies are looking for — that they were able to bid, and that they were able to get their bid considered in a fair way and the best company was chosen,” he said.

He said the US is promoting a private sector-led model of energy resource development where its companies, especially the smaller ones, can offer solutions, especially in renewable energy.

Asked about the enabling environment that US firms are looking for, he said these are the same as what other governments and businesses around the world would seek. In energy legislation, for instance, he said these the same as what US companies tell the government.

“But again it’s pretty basic — it’s transparent processes, they’re looking for what is the process if you have a dispute, how do you resolve that,” Mr. Logsdon said.

“They start from the beginning — in the very fairness of getting a contract, that if they put a bid down, it’s an open, transparent competition in order to win that. And then there’s the relationship with the government to figure out how they will share, whether it’s a production sharing agreements, whether it’s just again dispute resolution mechanism, what do you do when there’s a problem.”

Mr. Logsdon said US companies are keen to participate in Philippine projects, including petroleum exploration, if they see “the right kind of structure and enabling framework.”

“The US government can’t direct US companies to any place in the world,” he said.

“They have to see a resource that they think they can develop, and that they can actually be a profitable company there… that’s the bottom line.”