Spex consortium readies $24-M oil, gas drilling proj in Palawan

The consortium led by Shell Philippines Exploration BV (Spex) expects to start on its $24-million (P1.3 billion) oil and gas drilling project in offshore northeast Palawan soon.

Spex and other consortium members South China Resources and Kuwait Foreign Petroleum Co. expect to get approval from the Department of Energy (DOE) for its proposal to convert its geophysical service exploration contract (GSEC) into a full service contract (SC).

Based on its application, the consortium will acquire and process 450 kilometers of 3D seismic and 1,000 line-km of 2D seismic data and evaluate the block on the first exploration phase.

The consortium will initially invest $9 million for the first three years after the SC is awarded and another $15 million from the fourth to the seventh year of its operations.

"If approved, the partners will gain access to provision for geological and geophysical evaluation, including exploration drilling within its first seven years, as well as a 25-year production term in the event of a commercial discovery of hydrocarbons," said South China Resources in an earlier disclosure to the stock exchange.

South China is backed by the group of Edgardo Puyat-Reyes.

GSEC 99 covers a relatively unexplored area of 1.33 million hectares in northeast Palawan. It was awarded to the consortium of South China Resources in November 2000. In 2002, Spex assumed a 50-percent stake in the project.

Last March, Kuwait Foreign Petroleum, a unit of state-run Kuwait Petroleum Corp, became part of the group when it acquired an undisclosed stake from Spex.

The area to the east of Palawan has been generating interest from local and foreign exploration firms as it is considered an area with potentially large petroleum deposits, South China Resources said.

Energy Undersecretary Guillermo Balce said the entry of Kuwait Foreign Petroleum into the Philippine oil and gas exploration business is a "moral booster" to the country’s efforts towards energy independence.

Kuwait Petroleum has also recently farmed in with Japan Petroleum Exploration Co. Ltd. (Japex) in SC 46 over Tanon Strait between Cebu and Negros.