Nido, PNOC-EC to invest $20M on Southwest Palawan oil exploration

MANILA, Philippines - Joint venture partners Nido Petroleum Pty. Ltd. of Australia and state-run Philippine National Oil Co.-Exploration Co. (PNOC-EC) will spend $20 million to explore an offshore oil project in Southwest Palawan.

In a disclosure, PNOC-EC said the Department of Energy (DOE) approved the capital expenditures for Service Contract (SC) 63 until 2014.

“The SC 63 joint venture sought, and has been granted, an extension from the DOE of the current sub-phase 2B for a period of 12 months from Nov. 24, 2012 to Nov. 24, 2013,” Nido told the Australian bourse.

In the approved extension, the partners committed to spend $2 million to acquire, process and interpret 800 square kilometers of 3D seismic data and $6 million to drill one exploration well until November 2013.

PNOC-EC said the companies will also spend $12 million to drill two more exploration wells from November 2013 to November 2014.

The firms filed the request for extension of the exploration program given difficulties in the preparation for the drilling.

“The joint venture has been unable to secure a rig on acceptable commercial terms in order to meet the existing sub-phase 2B expiry date,” Nido said.

Nido said it received expensive offers to bring a drilling unit into the Philippines.

“This extension of sub-phase 2B will enable the joint venture to coordinate the SC 63 program with other drilling operations being planned in the Northwest Palawan basin during 2013,” said Nido managing director Phil Byrne.

It will allow the partners to lower costs and allocate the savings to additional exploration activities, Byrne said.

The 10,560-square kilometer SC 63 was awarded to PNOC-EC and Nido’s local unit Nido Petroleum Philippines Pty Ltd. through the Philippine Energy Contracting Round in January 2006. Both firms have an equal 50 percent stake in the block.

It is adjacent to Galoc, Nido, West Linapacan and Matinloc oil wells and is about 130 kilometers south of the Malampaya gas field that powers three major power plants in Luzon.