PNOC-EC leads search for new Malampaya investors

PNOC-Exploration Corp. (PNOC-EC) will take the lead in scouting for new investors for the oil rim development of Service Contract No. 38 or the Malampaya oilfield in Palawan.

"After we have formalized an agreement with SPEX (Shell Philippines Exploration B.V.), we directed PNOC-EC to spearhead efforts to look for new investors for the Malampaya oil development," Energy Undersecretary Eduardo Manalac said.

Mañalac said SPEX had formally abandoned the oil development in SC 38 where the consortium has an existing 20-year contract to develop its natural gas reserve.

"The SPEX consortium will not develop oil wells in the area so the government needs new entities to conduct the oil exploration aspect of the project," the energy official said.

PNOC-EC has a 10-percent share in the $4.5-billion Malampaya deep water gas-to-power project. SPEX owns 45 percent of the project while the remaining 45 percent is controlled by Chevron Texaco. PNOC-EC is the oil and gas exploration arm of the state-owned Philippine National Oil Co. (PNOC). SPEX is a member of the Royal Dutch Shell Group while Chevron Texaco is a US-based oil exploration giant.

The state-run oil exploration firm is currently in the process of privatizing a portion of its stake in the Malampaya project.

The SPEX-led consortium has committed to develop natural gas reserves in SC 38 for 20 years and pay the government some P9- billion worth of royalties during the duration of the contract.

The energy official said they are presently considering various measures to lure investors to pour money for oil exploration in the area.

He said they may adjust recovery cost measures of up to 100 percent. "It will depend on the law and how we could accommodate recovery costs demand. The bottom line is that the government wants its oil reserves developed at all costs," he said. At present, the government is providing about 70-percent cost recovery for oil exploration.

The multi-billion dollar project currently supplies natural gas to three gas-fired power plants in Batangas.

The Philippines is a minor oil producer and its gas sector has not been developed extensively. However there are significant offshore gas reserves which enable the government to make expanding gas use a priority particularly for power generation which will reduce the oil import bill.