DoE opens oil hunt season

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The government opened yesterday a new round of energy exploration which the Department of Energy (DoE) expects will ramp up the search for a major oil find in the country.

The DoE launched the Philippine Conventional Energy Contracting Program (PCECP) yesterday which aims to spur oil exploration in pre-determined and nominated areas where there are potential oil finds.

Energy Secretary Alfonso Cusi said in his speech the country only had five drilling activities per year within a decade which is lower than the annual drilling of Vietnam at 24, Myanmar at 29, Thailand at 594 and Indonesia at 900 wells per year.

“We are grossly trailing behind our ASEAN neighbors,” Cusi said in his opening address.
“The DoE has drawn up an enhanced system of awarding petroleum service contract. The PCECP was designed with the primary role of encouraging stakeholders to invest, explore, develop and produce Philippine indigenous energy resources,” Cusi said.

Priority program

In the keynote speech of President Rodrigo Duterte, he underscored that the PCECP, with all the other petroleum exploration and development undertakings of the DoE, is a priority of the Duterte administration.

He reiterated “the entire government will go above and beyond to make doing business in the country easier and more attractive.”

Attending the event were over 250 participants, including members of the diplomatic corps and the House of Representatives and industry partners, as well as local and foreign investors.

14 areas offered

The President cited four key measures that should be put in place to strengthen the upstream industry of oil and gas. These include a technically competent monitoring body, the effective implementation of streamlined policies, a sound political climate and the ability of government to preserve contracts, including security of investments.

Interested investors can select from 14 onshore and offshore areas that were predetermined by the DoE.

Area 1 is in the Cagayan Basin; Areas 2-4 are in the East Palawan Basin; Areas 5-7 are in the Sulu Sea; Areas 8 and 9 are in the Agusan-Davao Basin; Area 10 is in the Cotabato Basi, and Areas 11-14 are in West Luzon.

The predetermined areas up for exploration cover roughly 7.28 million hectares.

Rich Palawan sites

Energy Resource Development Bureau Director Melita Obillo said the East Palawan Basin, consisting of Areas 2, 3 and 4, hosts existing drilling activities in areas that have proven petroleum systems.

The West Luzon Basin, on the other hand, has large economic potential as the location is near Clark and Subic which host key economic zones, she added.

Aside from the 14 pre-determined areas, interested parties may nominate areas within the Exclusive Economic Zone (EEZ) for exploration at their own expense. However, the application to explore a nominated area shall require approval by the Department of Energy.

Energy Assistant Secretary Leonido Pulido III said the DoE may name the winning applications within the next 200 days.

Pulido explained the contract duration is for seven years and is extendable to another three years from the exploration phase. On the other hand, the production phase is covered by 25-year contract that can be extended to another 15 years.

But, “No service contract can go beyond a stipulated 50-year period,” the DoE official stressed.

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