Cadlao consortium allots $50M for oil field dev’t

MANILA, Philippines - Upstream oil firms Cadlao Development Co. Ltd. (Cadco) and VenturOil Philippines Inc. have allotted nearly $50 million to bring their oil field in Northwest Palawan to commercial operations.

The Cadlao project has the potential to become the third oil field in regular commercial production in the country.

VenturOil CEO Francis Abad said the partners will spend “roughly $47 million from today until we drill for the total capital expenditures.”

The funds will allow the company to drill two oil wells in September and October next year, Abad told reporters on the sidelines of the Upstream Energy 2012 forum.

The Cadlao consortium expects to produce the first barrel of oil at the end of November next year.

“Hopefully this will be the next oil producer in the Philippines,” Abad said.

To date, there are 26 service contracts in the Philippines. However, only the Malampaya and Galoc oil fields are in regular production.

The Philippines produces only 6,000 barrels of oil per day, way below the demand of around 300,000 barrels, data from the Department of Energy (DOE) showed.

“I think this is the only production-imminent field in the Philippines right now because everybody is drilling but they are just exploring,” Abad said.

Cadco holds an 80-percent stake in Service Contract 6 or the Cadlao project, with the remaining 20 percent owned by VenturOil. Cadco is also the project’s operator.

The Cadlao field previously produced 11 million barrels of oil back in the 1980s before it was plugged in 1991.

“In terms of bankable reserves, we think it has around 3.5 to 3.6 million barrels,” Abad said.

Cadco and VenturOil will produce around 10,000 to 15,000 barrels of oil per day, allowing the companies to continue operations in the next four to five years.

Potential markets for Cadlao’s oil are refiners Pilipinas Shell Petroleum Corp. and Petron Corp., Abad said.

Abad said the companies want to secure the highest price for the Cadlao oil given its high quality.

Moving forward,  Cadco and VenturOil will explore adjacent areas for more oil.

The companies are still waiting for the approval of the DOE for the exploration of the Bonita field, Abad said.

The consortium is also interested to farm in with new service contracts offered by the DOE, particularly those in Northwest Palawan, Abad said.

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

Compared with its peers in the region, the country’s upstream oil and gas industry is relatively small. This has been generally attributed to the high cost of development along deep seas and the quality of reserves that have been discovered.