DOE to award 40 oil, coal contracts by yearend

MANILA, Philippines - The Department of Energy (DOE) is looking to start the awarding of service contracts for nearly 40 petroleum and coal projects late this year.

This will jumpstart the country’s bid to explore its natural resources for new petroleum sources, a DOE official said.

Energy Undersecretary Ramon Allan Oca said they are hoping to award new service contracts under the Philippine Energy Contracting Round (PECR) 4 late this year.

“We are still undergoing continuous review,” Oca said on the sidelines of the Upstream Energy 2012 conference in Pasay City.

“We want to make sure that when we award these things, it is given to the really most qualified [firms] and that we want to ensure that the process is something fair,” Oca said.

The PECR 4 auctions in April and July attracted 20 offers for 11 petroleum blocks and 69 bids for 28 coal areas. In the past three PECRs, the DOE received only 12 bids in total.

In July last year, the DOE launched PECR 4, offering 15 new petroleum exploration projects and 38 coal blocks nationwide that will require around $7.5 billion in investments.

Oca said the review is already in the top management level of the DOE.

However, the awarding has already been pushed back. In July, the DOE announced that it might award service contracts to winning bidders in September or October.

Oca said numerous new service contracts will be awarded to companies all at once.

“As we know, the Philippines is underexplored so this is a step towards that (more exploration projects),” Oca said.

The PECR 4, the biggest offering of the country so far, comprises three onshore and 12 offshore blocks with a total area of more than 10 million hectares mostly located in Northwest Palawan and East Palawan that are in the West Philippine Sea (South China Sea) and Sulu Sea basins.

To date, there are 27 service contracts in the Philippines involving Shell Philippines Exploration, Nido Petroleum and BHP Billiton. However, only the Malampaya and Galoc oil fields are in regular production.

The DOE is pursuing energy independence and sustainability through the development of indigenous energy resources like coal, petroleum and natural gas.

For coal, local miners are producing only seven million metric tons (MT) of coal per year, not enough to support the nation’s annual demand of 12 million MT, data from the DOE showed. This prompts power generators and cement plants to buy coal in countries like Indonesia.

“The Asia-Pacific region has been and continues to be the most reliant to coal for power generation,” Rufino Bomasang, chairman of the Philippine Chamber of Coal Mines, said in his paper presented at the forum.

“Unfortunately, the expansion of Philippine coal development utilization has been stymied by opposition of different sectors on concerns on adverse impacts on coal mining and coal combustion,” Bomasang said.

Meanwhile, Oca said the DOE is still keen on developing the Camago well in the Malampaya gas field in Northwest Palawan.

“We are always trying to take a look on how we can develop that,” Oca said.

“But we have to ensure the safety of the gas operations because it stands in the middle of the gas operations so safety considerations for the gas operations are utmost importance,” Oca said.