"For the moment, Petronas decided to defer talks on the contract. They want first to carefully study the implication of the Supreme Court decision on the Mining Act," the source privy to the ongoing talks said.
The source said the Malaysian firm "wants an assurance that the SC decision will not have any implication on the petroleum service contract it will enter into with EC".
Local representatives of Petronas, Malaysia’s state owned energy firm, are currently seeking a formal opinion from the High Tribunal.
But for the part of EC, the source said the company has already assured the Malaysian oil conglomerate that the SC decision will not have an impact on the petroleum service contract entered into by EC.
"We are confident that we can still sign and proceed with the contract with Petronas. We told them this will not be an issue," the source said.
EC and the Department of Energy (DOE), have likewise sought the legal opinion of the Department of Justice on the said issue. "We are already waiting for the response of the DOJ," the source said.
EC president Rufino Bomasang, in a separate interview, said the drilling project will pave the way for Petronas to become EC’s strategic partner in exploring oil and gas prospects in offshore Mindoro, particularly in the so-called Cherry and Tablas areas.
Bomasang said after they firm up an agreement with their partner, EC will apply with the DOE for a new service contract.
EC a publicly-listed oil and gas exploration firm, has completed its seismic survey for some 960 kilometers in the said Mindoro exploration area last August 2002.
At the onset of 2003, EC had started to intensify its operations in oil, gas and coal exploration in preparation for the company’s planned shares offering slated within the year.
The exploration of Cherry and Tablas will need at least $5 to $10 million capital for every well. Early this year, EC has urged Petronas to renew its interest in seven oil and gas prospects in Cotabato.
The DOE, for its part, said the recent decision of the Supreme Court declaring unconstitutional and void provisions of the Philippine Mining Act of 1995 will not affect the petroleum service contract system which the DOE administers.
"After review and evaluation of existing petroleum service contracts and the model contract for future projects including potential Philippine Contracting Rounds-1 (PCR-1) awards, the DOE would like to affirm that petroleum service contracts issued in pursuance of the Oil Exploration and Development Act of 1972 remain valid," Energy Secretary Vincent S. Perez said.