More firms show keen interest in Malampaya

More local and foreign oil firms have expressed a keen interest in joining the development of the Malampaya oil rim, a ranking Philippine National Oil Co. (PNOC) official said.

PNOC president Eduardo Mañalac told reporters over the weekend that Basic Petroleum Corp., CITIC of China, Vitol and 3Energy of Malaysia have signified interest in joining the oilfield development.

Mañalac said they plan to farm out the contract for the Malampaya oil rim.

"The approach that PNOC will use is going to be a farm out offer," Manalac said.

He said they would start inviting partners as soon as they are able to thresh out all remaining issues and processes for the new service contract (SC).

Mañalac said PNOC is willing to divest majority of the shares of the contract to a "qualified" buyer.

"If they are going to take majority of the stake and they are good firms, why not," he said, when asked if PNOC will give up substantial shares of the oil rim development.

Aside from the three new interested investors, the other firms that have earlier signified interest in the oil rim are:  South China Resources, Argo, Petroleum Geo-Services (PGS), and Korea Gas Corp.

At present, he said they are awaiting the finalization of the terms of the service contract by the Department of Energy (DOE).

He said after this step, they will then proceed to the firming up of the agreement with Shell Petroleum Exploration B.V. (SPEX) consortium. SPEX used to operate the said oil rim but it decided to relinquish its right to develop the oilfield after doubting its commercial viability.

With SPEX’s decision to abandon the oil rim development, Malacañang has mandated PNOC, through Executive Order 473, to take the lead in developing the oilfield.

At the rate things are going, the PNOC chief said the target of end-2007 production from the Malampaya oilfield may not be "achievable".

"We are afraid we cannot meet the end-2007 timetable of oil production in the oil rim," he said.

He said there are a lot of factors that may cause the delay. "We have to recognize that there were problems of availability of oil rig and other drilling equipment.  There were sudden demand for these kind of equipment as a result of heightened activities in oil exploration due to continuing high oil prices," he said.

Interested investors in the oil rim will have to shell out $700 million to $900 million in development cost, which is deemed too expensive compared to the 25 to 40 million barrels of estimated oil reserves, equivalent to only two months of supply for the country.