THE Marcos administration expects an offshore oil field northwest of Palawan island to bring “recoverable” volumes of five to six million barrels of oil in early production towards the second half of 2023.
Its optimism comes after the Department of Energy (DoE) allowed Nido Petroleum Philippines Pty. Ltd. to proceed with an on-site survey for drilling locations under Service Contract (SC) 6B in the Palawan basin by the fourth quarter of this year.
In a statement on Tuesday, President Ferdinand R. Marcos, Jr. said the plan to conduct the survey in the Cadlao oil field will encourage investors to enter the country’s oil and gas sector.
He said the go-signal to Nido Petroleum, the operator of SC 6B, paves the way for the drilling of two wells — one exploration and one appraisal — during the first quarter of next year. The appraisal well could lead to early oil production into the second half of next year, he added.
Mr. Marcos said the plan signals the Philippine government’s “intent to maximize indigenous resources and has attracted strong interest from foreign investors in the Philippine upstream oil and gas sector.”
In his statement, he described the Cadlao oil field to have last produced in the early 1990s with more than 11 million barrels.
In February 2022, the “operatorship” of the oil field was taken over by Nido Petroleum from Forum Energy Philippines Corp.
Nido Petroleum committed to funding 100% of the development costs, “which include drilling, extended well tests, and subsequent development of the said oil field,” Mr. Marcos said.
On Monday, Energy Secretary Raphael P.M. Lotilla said in a forum organized by the Economic Journalists Association of the Philippines that “to maximize the use of indigenous natural gas and oil resources, the DoE underlined to local and foreign investors the Philippines’ firm commitment to preserve investment incentives for service contractors that are provided for under PD (Presidential Decree) 87.”
PD 87 was issued to revamp petroleum legislation by introducing the service contracting system. It provides financial incentives to contractors, including tax-free importation of equipment and supplies, exemption from all taxes except income tax, income tax assumption, accelerated depreciation, free market determination of crude oil price, and easy repatriation of investments and profits.
The DoE has yet to respond to BusinessWorld’s questions regarding details of oil exploration under SC 6B.
In July, Mr. Lotilla said Mr. Marcos instructed him to prioritize addressing uncertainties regarding investment incentives in the upstream sector.
Last month, the Department of Trade and Industry (DTI) said that Australian energy firm Sacgasco Ltd. is planning more offshore oil development in the country.
It said Sacgasco, which is locally operating as Nido Petroleum, was set to get a drilling rig in 2023 to conduct an extended well test in the Cadlao field, which is under SC 6B. A successful test would lead to the redevelopment of the Cadlao oil field, it added.
The project will be followed with a plan to drill another prospect, through SC 54A, also offshore Palawan, the department said.
The DTI quoted Sacgasco as saying that the initial investments for the oil projects in SC 6B and SC 54A are about $15 million each for the drilling and testing of oil production. — Kyle Aristophere Atienza and Ashley Erika O. Jose