This is the question that has befuddled our coffee shop gang after that alarming announcement by the giants Shell Exploration Corporation and Chevron-Texaco that they will not – will never – develop and extract the oil deposit underneath the natural gas layer from which they are now milking cash.
What has alarmed the barako bunch is not so much that the oil giants are not keen on extracting the oil. The real concern is that the duo has set impossible conditions for any other entity that might wish to come in and get the oil out for the Philippines to benefit from. Furthermore, we have heard energy experts say that if that oil deposit is not developed soonest and extracted within the next three years, it is gone forever.
Our caffeine connoisseurs have also earlier expressed concern that Filipinos may have been made to believe that the Malampaya field is just natural gas. This is a fallacy, we earlier underscored. Natural gas is spawned by the presence of an oil layer. And if Malampaya, as the service contractors boast, has 3.7 trillion cubic feet of proven natural gas reserves, imagine how large an oil layer probably lies underneath.
We earlier quoted the Energy Information Administration of the United States Department of Energy saying the Malampaya gas field has an estimated 85 million barrels of oil. At current world price levels which have recently breached the $60 per barrel mark, that means $5.1 billion in oil reserves that Shell and Chevron-Texaco have decided to let go to waste – as if their host country did not need that oil.
Wow, P280 billion worth of precious crude oil lost forever!
We earlier echoed the fear of energy sector insiders that it may not be in the interest of Shell and Chevron-Texaco to tap Malampaya’s oil rim. This would not make good business sense for them at this point since the natural gas layer is already generating huge profits for them.
We said we respected that business position but nevertheless hoped that, as long-time partners of the government, Shell and Chevron-Texaco might wish to consider what is in the best interest of their host country and what makes sense to us. For a change.
We were, of course, disappointed. Host country interest is not a primary factor in the business-decision making processes of most giant multinationals, it appears. At least, not for Shell Exploration Corp., and Chevron-Texaco.
Now that their business positions on the Malampaya oil rim issue is clear, the government – particularly the Energy Department – may now wish to exercise its sovereign authority over Malampaya. After all, we, the Filipino people, own Malampaya. Shell and Chevron-Texaco are mere service contractors. They do not own even a square inch of that geological wonder.
Our ownership over valuable resources such as Malampaya was recently affirmed by the Supreme Court. In reviewing the Mining Act, the High Court reiterated that ownership and sovereignty over these resources remain with the Filipino people. It is not transferred to the service contractor.
For starters, Energy Secretary Raphael Lotilla should order the duo to develop and extract the oil deposit. Nobody is buying the position that it would not be profitable for any entity to extract $5.1 billion worth of oil. It would be unprofitable only if Shell and Chevron-Texaco insist that any new developer should set up a $12 billion indemnity fund to guarantee compensation for any "damage" to the profitability of the natural gas business.
Analysts believe the oil rim business would be very profitable even for Shell and Chevron-Texaco. Since they are already present in Malampaya, it would not take much money to pursue the oil rim development.
Coffee shop pundits suspect, of course, that profitability is not the real issue over the refusal of the duo to help the Philippines address its crude oil needs by tapping the oil rim. The cappuccino gang believes the duo is still smarting from the recent refusal by Economic Planning Secretary Romy Neri to consummate the sale of the government’s stake in the Malampaya service contract. It could be the duo’s way of getting back at the government, they point out.
Secretary Lotilla should not let the duo’s tantrums get in the way of our bid to get that oil out of Malampaya before time runs out.
Would the government consider taking over the job of developing and extracting Malampaya’s crude oil deposit? An excellent idea, our barako bunch believes. The government can tap the technical resources to do it. All it needs is the political will to lay its hands on that precious oil that Shell and Chevron-Texaco would rather let go to waste.
Once again, we say that a thorough review of Service Contract 38 would perhaps remind the global oil giants that Malampaya is the property of the Filipino people. And that, at the end of the day, their role in the project is that of service contractors.
And if the message does not get across, the Energy Department should start exercising its authority over the project and the facility.
If we lose Malampaya’s oil deposit, someone is bound to be answerable. Shell and Chevron-Texaco would most likely invoke their legal bases. The government will have nothing to stand on.
So, Secretary Lotilla: please don’t let that precious oil go to waste, forever.
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