Spex, Chevron eye Gindara block in Northwest Palawan

MANILA , Philippines - Shell Philippines Exploration BV and Chevron Malampaya LLC, two of the major operators of the $4.5-billion Malampaya deep water gas to power project are eyeing to invest in Service Contract 54 B or the Gindara block in offshore Northwest Palawan.

SPEX and Chevron hold 45 percent each in the Malampaya project which is also located near the Gindara oil prospects in the northwesten side of Palawan waters.

The Malampaya project has an estimated recoverable reserve of about 600 million barrels of oil.

In a report released by Southern Cross Equities, which was commissioned by Kairiki Energy Ltd. to study its ongoing projects, it was learned that the SC 54B consortium composed by Kairiki (40 percent) and Nido Petroleum Ltd (60 percent) are currently in discussions for a possible partnership with Spex and Chevron.

Nido and Kairiki have been scouting for interested investors for a possible farm-in agreement since 2009.

“We understand that negotiations have been ongoing for some time with neither side agreeing to terms,” Southern Cross said.

While Southern Cross did not identify the companies, industry officials have confirmed Shell and Chevron as among those that are keen to enter into a farm in contract with the Gindara block developers.

The development of the Gindara prospects would need some $30 million in capital.

According to the study of Southern Cross, it would be best for Nido/Kairiki to spread out risks by tapping partners in developing the Gindara prospect.

It said Nido and Kairiki have the option to drill the Gindara prospect on their own which would mean “higher risk approach but also provide much higher reward.”

Nido head of exploration Jon Pattillo had said Gindara could be the next biggest oil find for the company.

Patillo said the Gindara may be the highest ranked drilling candidate in Nido’s Northwest Palawan exploration portfolio “in terms of its excellent risk profile and potential significance to the company.”

“The prospect is comparable in scale to Shell’s Malampaya field, 30 kilometers to the north, but located in only 320 meters of water and close to the joint ventures recent discoveries at Tindalo and Yakal in adjacent SC 54 Block A,” he said.

The Gindara prospect, he said, is “drill-ready” and the consortium is planning to start its exploration drilling program in 2011.