D.O.E. offers oil-, coal-exploration opportunities

by Lenie Lectura – December 6, 2015

from Business Mirror

THE Department of Energy (DOE) showcased the country’s vast petroleum- and coal-exploration opportunities to lure in more investors.

At the Energy Investment Forum held on Friday, Energy Undersecretary Donato D. Marcos said there are “areas of opportunities in the petroleum sector” in which prospective investors can choose from.

Marcos said there are 16 sedimentary basins representing an area of over 700,000 square kilometers, with a combined potential of 4,777 million barrels of fuel equivalent.

At present, the country has 29 active petroleum service contracts with Shell Philippines Exploration, Total E&P, Otto Energy, Philippine National Oil Co.-Exploration Corp., Nido Petroleum, Philodrill, Pitkin Petroleum and Galoc Production Co., to name a few of DOE operator-partners.

These contracts have produced 1.42 million barrels of oil, 63.33 billion cubic feet of gas and 1.97 million barrels of condensate.

“We hope to invite more investors in the country through our continuous conduct of the Philippine Energy Contracting Round [PECR],” Marcos said.

PECR is a transparent mechanism that allows the government to develop and utilize indigenous petroleum resources under a service contract through partnerships with qualified local and international exploration companies.

Last year PECR5 was launched with 11 petroleum areas offered. As a result, four proposals were received by the DOE and three proposals have been qualified for evaluation.

Under this bid, 11 petroleum blocks—with a total of more than 4.7 million hectares in West Luzon, Southeast Luzon, West Masbate-Iloilo, East Palawan and the Recto Bank—were offered for exploration and development.

The areas for petroleum exploration include Area 1 in Southeast Luzon; 2 and 3 in Masbate-Iloilo; 4 and 5 in Northeast Palawan; 6 in Southeast Palawan; 7 in West Palawan; and 8 to 11 in West Luzon.

Two of the blocks are close to the Spratly Islands, of which a
portion is claimed by the Philippines and subject of a territorial dispute with China.

Ratio Oil Exploration Ltd. of Israel submitted an offer for Area 4, which covers 416,000 hectares (ha) in waters east of Palawan.

Colossal Petroleum Corp., an affiliate of listed Coal Asia Holdings Inc., submitted bids for Area 5, a 576,000-ha block in waters east of Palawan, and Area 7, a 468,000-ha block within the disputed Reed Bank.

There were no offers received by the DOE for other areas.

A petroleum-service contract has a seven-year exploration period, which could be extended to up to 10 years. If exploration activities were successful, the parties could enter into a 25-year production period.

PECR5 could increase the country’s oil production to 39,000 barrels per day (bbl/d) by 2019, US Energy Information Administration (EIA) said in its latest report.

“In 2013 total oil production was 26,000 bbl/d, while the country consumed 299,000 bbl/d. In May 2014 the government invited tenders for 11 oil and gas blocks in the Palawan Basin and nearby areas, including one on the South China Sea. This exploration bid round could push oil production up to 39,000 bbl/d by 2019,” EIA said.

The coal sector, meanwhile, is another potential source of power. “We have coal reserves all over the country that could be explored and developed,” Marcos said.

The DOE, he added, is currently monitoring a total of 76 coal-operating contracts (COCs). Of which, 46 are in exploration phase and 30 are in the development and production phase.

“During the PECR5, 15 coal areas were also offered to encourage private companies to participate in the coal business. As a result, seven contracts have been awarded and are all in the Mindanao region,” Marcos said.

The DOE has been conducting regular investment fora in Luzon, the Visayas and Mindanao to promote investments in the Philippine energy sector by facilitating the process of doing business and availment of incentives in the country.

Friday’s forum held in Makati City is part of the government’s continuing commitment to facilitate ease in doing business in the energy sector, said Electric Power Industry Management Bureau Officer in Charge Irma Exconde, who added that the Philippine energy sector still has a broad spectrum of opportunities to offer.

About 200 project developers and representatives from financial institutions, distribution utilities and electric cooperatives, the business sector, government agencies and diplomatic organizations attended the event.