MANILA, Philippines — The Philippine government signed on Thursday an "initial" seven-year oil exploration deal with an Israeli firm in a bid to develop the country’s own energy sources amid sharp swings in oil prices in the international market.
At a ceremony in the Malacañan Palace, Philippine President Rodrigo Duterte and his energy minister, Alfonso Cusi, inked a petroleum service contract with Itay Raphael Tabibzada, president and CEO of Israel-based Ratio Petroleum Ltd.
Ratio Petroleum can now explore Area 4, which covers 416,000 hectares across the East Palawan Basin, for potential oil and gas resources.
Projected total expenditure is valued at a minimum of $34,350,000.
“The President has been very clear — our country needs to attain energy security and sustainability at the soonest possible time. We are currently experiencing how our dependence on importation has left us at the mercy of price movements in the global oil markets,” Cusi was quoted as saying in a news release.
“We need to boost the exploration and development of our own energy resources and the awarding of the petroleum service contract to Ratio Petroleum is a step in the right direction,” he added.
Inflation jumped to an over nine-year high of 6.7 percent in September, amid food supply bottlenecks, a weak peso and a surge in global oil prices, which translated to higher pump prices in the Philippines, a net importer of oil.
Some analysts see oil prices spiking above $100 per barrel towards the end of 2018 or by early 2019, as US President Donald Trump’s sanctions against Iran, a major crude exporter, take effect in November.
Philippine policymakers, meanwhile, expects price of Dubai crude — used as a benchmark for Asia — to average $70-75 per barrel this year and $75-85 next. This range is forecast to drop to $70-80 a barrel in 2020, before declining to as low as $65-75 for 2021 and 2022.
Year-to-date, domestic gasoline price jumped P10.55/liter, while prices of diesel and kerosene increased P11.50/liter and P10.50/liter, respectively.
The petroleum service contract with Ratio Petroleum, which has large operations at the Levant Basin in the Eastern Mediterranean Sea, was the first under Duterte.
The Duterte government is also working on a framework on possible joint oil exploration with China in the resource-rich West Philippine Sea, the portion of the hotly disputed South China Sea that the Philippines claims. However, this plan has been met with protests from administration critics. — Ian Nicolas Cigaral