Fiscal stability needed in Philippine upstream oil sector – PAP

MANILA, Philippines - The Philippine upstream oil sector should have fiscal stability in order to attract more investors and get the industry moving forward, a leading oil group said.

“The Petroleum Association of the Philippines (PAP) wants us to have fiscal stability. So it’s the desire of our service contractors are here already operating there’s fiscal stability,” said PAP president Sebastian Quinones, who is also the managing director at Shell Philippines B.V. (SPEX).

The statement came after the Commission on Audit discovered the consortium operating the Malampaya deepwater gas-to-power project owed the government P53.14 billion in taxes in 2009.

Malampaya, which began operating in 2001, is a joint undertaking of the Philippine government and the private sector composed of SPEX, state-owned Philippine National Oil Co. Exploration Corp. and Chevron Malampaya LLC.

Quinones said the 30-member association has made its position known to the Department of Energy (DOE) and expressed willingness to work with the government to avoid a repeat of the 2009 findings.

“We have discussed it with [DOE OIC] Sec. [Zenaida] Naydee [Monsada]. We verbalized what we’re aiming for and we’re working with the DOE,” Quinones said.

The Malampaya consortium had appealed the 2009 findings, but COA rejected the petition because “the payment by the government of the income tax increases the 40 percent share of the contractors and reduces the 60 percent share of the government in the net proceeds.”

COA further claimed that there is no provision in the law that specifically provides that the income taxes of the contractors will be part of the share of the government.

As for SPEX, Quinones said the upstream company of energy giant Shell wants to settle the issue “amicably.”

“We’re discussing things with government that’s why we’re looking for an amicable settlement,” he said. 

“We are also looking at all the legal remedies and obviously, the consortium will go through the legal remedies,” he added.