MANILA, Philippines — The Department of Energy (DOE) expects exploration companies to rethink their plans as oil prices are seen to remain low until the third quarter due to the coronavirus pandemic.
In an interview with ANC, Energy Secretary Alfonso Cusi said demand for fuel would remain low as restrictions in travel and commuting continue.
“We are seeing lower demand from consumers. There will still be restrictions of people, on the mobility of the people. Gatherings, events that will still be restricted and that will affect the demand for oil,” Cusi said.
Moody’s Investors Service said global demand for fuel will remain depressed for the rest of the first half but it sees some slow recovery in the second half as economies start to open up again. This will be a plus for the Philippines as the country relies heavily on oil imports.
Cusi noted that the low oil price environment globally could derail the development of the country’s oil and gas sector.
“Because of the low price of oil, these exploration companies will again take time to think and see their options. Just like the US, which is experiencing a negative price, they’re practically giving oil for free. So these exploration companies will rethink their options,” Cusi said.
The Philippines has fallen behind in the ASEAN region as peer countries have been drilling much more than the country. It has not seen investments in the sector since the Malampaya deepwater gas-to-power project as oil and gas exploration and development is capital intensive.
The DOE launched the Philippine Conventional Energy Contracting Program (PCECP) in November 2018 to help reinvigorate petroleum exploration and development activities in the Philippines.
Under the PCECP, the DOE offered 14 predetermined areas (PDAs), and the option for investors to propose their own exploration area, making oil and gas exploration a dynamic investment prospect for players in the energy sector.
Of the 14 PDAs, the agency only received four bids amid challenges in the country’s upstream sector.
The DOE will continue marketing the PDAs without offers to investors. It also maintained its timeline on the nominated exploration areas under PCECP as it received four nominated areas.