The Philippines has set out a new round of leasing hydrocarbon basins in a bid to raise indigenous hydrocarbon supplies and cut the heavy dependency on imports of high-price crude oil.
The Department of Energy (DoE) launched the fourth Philippine Energy Contracting Round on June 30 in Manila, targeting an exploration investment of $7.5 billion. Each of the 15 oil and gas contracts is expected to generate as much as $500 million over the seven-year exploration period.
The Philippine Department of Energy says that it is targeting an exploration investment of $7.5 billion from the fourth Energy Contracting Round.
The DoE estimates 5.034 Bbbl of oil and 38.16 tcf (1.08 bcm) of gas in the 15 areas, and contracts should be awarded early next year.
Petro Energy Resources Corp., PNOC Exploration Corp., Philodrill Corp., BGP Inc., Galoc Production Inc., Nido Petroleum Inc., Norasian Energy Ltd., Chevron Malampaya Philippines LLC, China Union Global Holdings Ltd., Forum Energy PLC, Basic Energy, and One Asia Oil & Gas Corp. are among the bidders for the 12 offshore and three onshore contract areas.
Energy Secretary Rene Almendras expects the successful concession holders to drill three to five exploration wells over the seven-year exploration period. Each exploration well could cost as much as $100 million.
The contract areas cover hydrocarbon prolific areas across 10.3 million hectares (25.5 million acres) within the basins of Northwest Palawan, East Palawan, Sulu Sea, Mindoro-Cuyo, Cagayan, Central Luzon, and Cotabato.
The resource-rich Northwest Palawan is home to the Malampaya field, which has produced 970 bcf (27 bcm) of natural gas, 43.9 MMbbl of condensate and 1.9 MMbbl of crude oil.
The Malampaya project is testimony to the indigenous oil and gas resources in the country, where latent hydrocarbon basins have been showing good leads in seismic data.
The DoE undersecretary Jose Layug highlighted the potential of discoveries in largely unexplored basins of the country. Eleven wells have been drilled in the areas being offered under 4 PERC with 100 to 5,000-line km (62 to 3,107 mi) of seismic data.
Layug is also banking on the recent discoveries, pointing out that three of the four exploration wells were gas discoveries. The wells were drilled by ExxonMobil in the Sulu Sea.
Speaking during a 4 PERC roadshow in Singapore, Layug assured investors of favorable fiscal terms, giving as much as 40% of the profit oil from production sharing. He stressed the government would get 60% of the profit oil but there were no further royalties.
He also assured of a growing domestic market, pointing out there were no subsidies except for a value added tax of 12% implemented since 2005. The country's oil demand averages 300,000 b/d.
Exxon Mobil, Shell Philippines Exploration, Nido Petroleum, BHP Billiton, and Galoc Production Co. are among major oil and gas concession operators in the country. PERC guidelines were released on July 11, 2011, for bidding for the 15 areas, each of between 400,000 to 900,000 hectares (988,418 to 2.2 million acres).
The DoE is determined to make the country 60% self-sufficient in energy by 2024. The Middle East accounts for 94% of crude oil imports into the country with Southeast Asia supplying 4% and Australia 2%.
The Philippine National Oil Co-Exploration Corp. (PNOC-EC) would be eyeing for some of the most attractive contracts in 4 PERC to increase its existing portfolio of oil and gas fields.
"We are interested in the Palawan areas, both onshore and offshore areas," PNOC-EC President and CEO Gemiliano C. Lopez told reporters in Manila.
PNOC-EC has PesO2.5 billion ($59 million) for exploration expenditure in the new areas. The company reported earnings of P2.42 billion ($57 million) in 2010, 34% higher than its 2009 net income of P1.8 billion ($42 million). The company said the increase can be attributed to increased gas and condensate prices.
PNOC-EC has stakes in consortiums operating in the Malampaya field and Service Contracts 43, 47, 57, 58, 59, and 63 in Palawan. The company would be studying the new areas, three of which are being offered in Northwest Palawan, six in East Palawan, one in Cagayan, one in Central Luzon, two in Mindoro Cuyo, one in Cotabato, and one Sulu Sea.
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