PNOC-EC allots $1B for Malampaya oil exploration

PNOC-Exploration Corp. (PNOC-EC), the oil and gas exploration unit of state-run Philippine National Oil Co., expects to spend close to $1 billion for the exploration and development of the Camago-Malampaya oil leg (CMOL), a top company official said.

PNOC-EC president Rafael del Pilar said the CMOL development may entail a capital expenditure of about $500 million and operational expenses of another $400 million.

Del Pilar said they would raise a portion of the development cost for CMOL through proceeds from the secondary share offering they intend to undertake in February next year.

He pointed out, however, that they have yet to firm up the set-up for the development of the oil exploration area, as they are still awaiting the decision of Energy Secretary Angelo T. Reyes, the new PNOC chairman.

Del Pilar said one of the options presented to Reyes is the possibility of allowing the Malampaya operators to revisit the CMOL development.

The Malampaya operators, the consortium developing the Malampaya oilfield (Shell Philippines Exploration B.V., Chevron and PNOC-EC) earlier decided to relinquish the right to explore CMOL after finding it unviable.

Del Pilar also said they have other options such as PNOC-EC tapping a strategic partner or PNOC-EC developing CMOL by itself.

Once PNOC-EC opens the project to other parties, it expects to bid out the partnership contract in the early part of 2008, in time for the company’s shares offering.

“An option is reviving Shell, Chevron and PNOC-EC to develop, another is to invite a third party, and another option is for PNOC-EC to do it by itself. And if and when we decide it by ourselves we’ll be banking on the proceeds of the secondary offering,” Del Pilar said.

A number of oil exploration firms have earlier expressed interest to bid for CMOL, including newly-merged NorskHydro ASA and Statoil.

The Department of Energy (DOE) said another interested firm in the oil rim development is US-based Argo Group, which has direct operational experience from producing oil from the Malampaya oil rim.

PetroEnergy Resources Corp., a listed company at the Philippine Stock Exchange, also showed keen interest. It provides technical services to local and international companies, as well as participates in various exploration and development activities, both local and overseas.

The selection of the partner in the CMOL project had been delayed due to unresolved issues like the indemnity and insurance being sought by the existing consortium developing the Malampaya project.