By Victor V. Saulon
STATE-LED PHILIPPINE National Oil Co.-Exploration Corp. (PNOC-EC) and listed company PXP Energy Corp. are two of eight entities that have identified areas in the contested areas of the West Philippine Sea for possible oil and gas exploration, an Energy official said.
Dalawa ‘yong natatandaan ko — PNOC-EC and PXP,” Department of Energy (DoE) Undersecretary Donato D. Marcos told reporters last week when asked about an update on the agency’s Philippine Conventional Energy Contracting Program (PCECP).
Launched on Nov. 22, PCECP is the DoE’s revised petroleum service contract awarding mechanism that allows investors to bid for exploration projects through the competitive selection process or by nomination.
Dati na silang nagno-nominate (They have been nominating),” said Mr. Marcos about the areas being nominated by PNOC-EC.
Under the program, the DoE identified 14 pre-determined areas composed of onshore and offshore sites located in the Cagayan Basin (one area), Eastern Palawan (three areas), Sulu (three areas), Agusan-Davao (two areas), Cotabato (one area) and in Western Luzon (four areas).
Investors may also develop locations other than those in the list by nominating their areas of interest, subject to the approval by the DoE.
Mr. Marcos declined to give details about the nominated areas but said PXP Energy is keen on exploring an area adjacent to its Service Contract (SC) 72.
Ibang area. Halos kasing laki ng (It’s a different area. Almost as big as) SC 72. SC 72 is 880 hectares. Katabi halos (Almost beside it),” he said.
PXP Energy directly and indirectly owns 77.5% of Forum Energy Ltd., a London-listed company whose main asset is a controlling interest in offshore SC 72 west of Palawan island in the disputed seas with China.
On March 2, 2015, the DoE placed SC 72 under force majeure because the contract area falls within the disputed area, which was the subject of the arbitration process.
Under the terms of the force majeure, exploration work at SC 72 was suspended starting Dec. 15, 2014 until the DoE notifies Forum Energy that it may continue drilling.
SC 72 is covered by the decision handed down by the Permanent Court of Arbitration in The Hague in the Netherlands on July 12, 2016. The court ruled that Reed Bank, where SC 72 lies, is within the Philippines’ exclusive economic zone as defined under United Nations Convention on the Law of the Sea. China does not recognize the ruling.
Of the 14 areas identified by the DoE with a total size of 7.24 million hectares, all but one — Cotabato basin — have received interest from prospective investors, Mr. Marcos said. The companies have 180 days from Nov. 22 to submit their bids.
Entities that nominate and publish other areas of interest may submit at any time of the year. Their areas would be subjected to a 60-day challenge period where other entities.
All accepted applications will be evaluated by the DoE’s centralized review and evaluation committee.
Before the launch, the department conducted several road shows to drum up awareness on the program, including an international road show held in Singapore in August.
There are currently 23 active petroleum service contracts in the Philippines with developers, including Shell Philippines Exploration B.V., Total E&P Philippines B.V., PNOC-EC, Nido Petroleum Philippines Pty. Ltd., Philodrill Corp., PXP Energy, and Galoc Production Co.
The Philippines is home to the Malampaya deep water gas-to-power project, the largest and most successful natural gas industrial project in the country’s history.
In October, the administration signed its first service contract — SC 76 covering eastern Palawan — with Israeli firm Ratio Petroleum Ltd., signaling the country’s stance to revive the upstream petroleum industry.