DOE to bid out new energy blocks

The Department of Energy (DOE) will pursue another Public Contracting Round (PCR) involving the auction of petroleum, geothermal and coal blocks in the country, intensifying efforts to gain energy independence on imported fuels and promote energy diversification.

Energy Secretary Raphael P.M. Lotilla said the second PCR will be launched next month."To pave the way for the bidding out of these blocks, a moratorium on new applications for negotiated service contracts for petroleum, geothermal and coal shall commence on May 1, 2005."

The energy chief said each petroleum block covers an area of around 12,000 square kilometers.

Several prospective areas in offshore West Palawan and Sulu Sea will be offered to interested investors. He said the petroleum sedimentary basins located in these areas are considered the country’s most prospective sites for petroleum exploration.

Lotilla said geothermal blocks shall be bid out for power and non-power purposes such as for multi-crop drying, salt-making, refrigeration by absorption, and even hot bath and spa.

Last December 2004, the DOE officially turned over to PNOC-Energy Development Corp. (EDC) the proposals of three companies for the development of two geothermal sites in the country.

Japanese firms Marubeni Corp. and Mitsui & Co., Ltd. were joined by local company CPI Energy Phils., Inc. in the Philippines’ first geothermal bidding round, the first bidding scheme of its kind in the world.

The bidding was launched in March 2004 by the DOE to promote investments for the development of prospective geothermal areas in the country. EDC, the government’s geothermal arm, will assume the evaluation of the proposals.

Mitsui and CPI Energy both submitted bids to develop the Rangas-Tanawon geothermal site in the province of Sorsogon. Marubeni, the build-operate-transfer (BOT) contractor of EDC for the Mindanao Geothermal Production Field (MGPF), chose the optimization project in North Cotabato.

Both geothermal prospect areas chosen by the companies are covered by existing geothermal service contracts between EDC and the National Government.

EDC also has similar existing contracts for the Manito-Kayabon (Bicol), Cabalian (Southern Leyte), and Dauin (Negros Oriental).

In addition, Lotilla said coal also has strong market potential. "Coal potential remains high.

Locally produced coal supplies about 20 percent of the country’s 10 million tons per year coal requirements, thus there remains a vast market for additional coal production for clean coal power generation and the cement industry," he said.

Lotilla also ordered the draft bill on Renewable energy reviewed in 30 days."The review will determine whether, within the Constitution, we can consider the economic necessity of defining geothermal resources as mineral resources. This would allow the utilization of geothermal resources to be made on the same basis as the rest of the mining industry."

"We have precedents for this in other areas of the world and would not be violative of the Constitution. In the Philippines, this would allow the entry of much needed capital for the fullest utilization of the country’s geothermal resources on the same terms that the Supreme Court has recognized for the mining sector," Lotilla added.

During the first PCR, BHP Billiton with Unocal Corp., Amerada Hess, and Sandakan Oil, submitted bids for two blocks in the deep water part of the Southern Sulu Sea, covering about 8,000 square kilometers.

In Aug. 2003, the DOE bid out 46 new exploration blocks located near the Malampaya gas field in Palawan and other oil and gas discoveries and producing fields in Southwest and East Palawan Sea and Reed Bank.