3 foreign firms eye RP oil search sector

At least three foreign oil exploration companies are about to sign a new geophysical survey and exploration contract (GSEC) that will generate more than P2 billion in fresh investments, Energy Secretary Vincent S. Perez said yesterday.

In a press conference, Perez said they are "in an advanced state of negotiations with big exploration firms based in United Kingdom, Canada and Japan.

"We will finalize the discussions next week. And we will start to sign soon (particularly with the United Kingdom-based firm)," he said, adding that these firms are eyeing drilling areas in Northwest Palawan, onshore and offshore Cebu.

As a rule of a thumb, a drilling firm will need to pour in some $10 million (approximately P510 million) per well for offshore exploration and some $2 to $4 million for onshore drilling.

The Philippines has increased the number of its petroleum basins to 16 covering an area of more than 700,000 square meters, from 13 basins or 500,000 sq.m.

The 16 basins are: Northwest Palawan, Southwest Palawan; Central Luzon; Visayas; Mindoro-Cuyo; Cagaya; East Palawan; Southeast Luzon; Reed Bank; Cotabato; Agusan-Davo; Sulu Sea; West Luzon; Ilocos; Bicol Shelf; and Iloilo West Masbate. The three additional basins are: East Palawan, Reed Bank and Mindoro-Cavite.

Perez said they hope to discover more oil basis in the future. He said they hope to discover a second Malampaya in the Philippines. The Malampaya Deep Water-to-Gas power project, located in Northwest Palawan, is the single biggest investment in the Philippines with $4.5 billion fresh capital in the upstream exploration industry. The government expects to earn more than $9 billion in royalties over a period of 20 years from the project.

The DOE plans to conduct an international roadshow presentation to various countries in the next few months to encourage investors to take a look at these potential petroleum sites. DOE intends to do the first roadshow in Norway during the Norwegian Oil Technical Conference.

The last time the country entered into a GSEC was in 2000. It signed a contract with PNOC-Exploration Corp. covering the area of Southern Mindoro.

Perez, however, said they need to thresh out first some amendments to the existing law on royalties and incentives before going to the international market. "We have prepared some legislative agenda to allow us to get the best deals. We need to make some changes in the law to allow flexibility in royalties to encourage more service contractors to come in and invest," he said.

The DOE expects to drill five to eight wells this year. The country has petroleum resources – oil, natural gas and condensate – estimated at about 8.895 billion barrels of oil equivalent. Discovered resources or those that have been drilled have a total of 973 million barrels or 10 percent of the total resource. This means the undiscovered resources, which are highly potential but have not been drilled carry an estimated 7.9 billion barrels.