PNOC upbeat on RP’s exploration prospects

The Philippine National Oil Co. (PNOC) said the ongoing overhaul of the local energy exploration sector has succeeded in winning back the confidence of the international investor community and boosted the prospects for the faster development of the national oil industry. 

This was disclosed yesterday by PNOC president Eduardo Manalac during the Kapihan Sa Sulo media forum. Manalac said the government’s strategies set in place over the past three years have ensured that the Philippine oil industry "will once again be taken seriously by local and international groups with the technological and financial capabilities to undertake genuine exploration activities".

Manalac said the positive environment in the exploration sector was triggered by the government’s resolve "to rid the sector of local and foreign entities with dubious and unproven credentials". He said the full review of service contracts initiated in 2003 triggered the revitalization of the sector. The review was followed by a policy of mandatory compliance with contract terms imposed on service contract holders.

Manalac pointed out that the policy corrected the "erstwhile moribund situation of the local oil industry". He explained that prior to the review and policy of mandatory compliance, the industry virtually "locked out reputable and capable foreign investors from taking part in its development".

He noted that the sector was "a virtual monopoly held by concessionaires who were awarded contracts without the benefit of a transparent and clear-cut process".

The adoption by the government of a new system of open and merit-based awarding of service contracts, however, has enticed foreign oil investors to "take a second look at the Philippines as an investment target", Manalac added. 

This was proven by the first ever Philippine Contracting Bid Round held in 2004 and the opening of new oil exploration areas in the Palawan and Sulu seas, he said.

Manalac said the continuing confidence of local and international investors in the oil industry "augurs well for the government’s bid to tap and develop the oil deposit under the natural gas layer in Malampaya". 

The government earlier disclosed that the Malampaya oil rim has an estimated 25 to 40 million barrels of crude in the 56 meter-thick zone below the 600 meter-thick natural gas layer being operated by a consortium.

Government estimates of possible royalties from the deposit hovers within the $1 billion to $1.6 billion range based on world market prices of $40 per barrel. Current prices, however, have peaked beyond the $60 per barrel range.

Manalac pointed out, however, that the government "is making sure that only legitimate firms with proven track records and technical and financial capabilities are allowed to take part in this project."