DOE set to award 2 more oil exploration contracts

The Department of Energy (DOE) is set to award two more oil exploration service contracts (SC) within this month, a ranking DOE official said.

Energy Undersecretary Guillermo Balce, in an interview with reporters, said they are ready to award the Area 1 exploration area in southwest Palawan to the partnership of Australia-listed Nido Petroleum and the Philippine National Oil Co.-Exploration Corp. (PNOC-EC).

Another SC, he said, would be awarded to the group of Malaysia’s Ranhill Berhad and Phil-Mal Petroenergy Corp. for the exploration of the Sulu Basin or the Area 4.

Balce said these two groups won in the bidding during the second Philippine Energy Contracting Round (PECR) closed in November 2005.

The government expects to earn about $300 million in the next seven years from four new SCs on oil and gas exploration.

In the first seven years of the contract, it is expected that each exploration firm/group would spend about $70 million to $75 million, or a minimum of $10 million each well, and about $5 million for other costs like geological studies and training.

The $300-million investment in the first seven years of the SC excludes the capital that would come in if the exploration proves to be of commercial value.

Balce said they expect to open five to six more exploration blocks for oil and gas and nine blocks each for geothermal and coal.

The four petroleum contract areas cover a total of 49,789 square kilometers in shallow to deep waters.

The government has embarked on an aggressive development of the country’s energy resources through improved contracting and bidding schemes and enhanced fiscal incentives in pursuit of its quest to increase the country’s energy self-sufficiency.

In 2003, the DOE launched PCR-1 wherein exploration blocks near oil producing areas in Northwest Palawan and in vast frontier basins in Southwest and East Palawan, Sulu Sea and Reed Bank were offered for investors. Two blocks were eventually awarded to BHP Billiton Petroleum through SC 56.

Since December 2004, about 16 petroleum exploration service contracts have been awarded with minimum financial resources amounting to $215.31 million committed to the proposed work program.