Government opens Malampaya to oil drilling

Mounting oil prices prompted President Arroyo to announce yesterday that the Department of Energy would open within the week the Malampaya offshore field to possible concessionaires for oil drilling.

Energy Secretary Raphael Lotilla said the Philippine Mining Act of 1995, which was affirmed by the Supreme Court, allows oil and gas exploration in Malampaya.

"Originally, we were expecting Shell (to do the oil drilling), but since it would not, we would have to open it (to new concessions)," the President said during a roundtable discussion with Lotilla, Bukidnon Rep. Juan Miguel Zubiri and Seaoil Philippines Inc. president and CEO Francis Glenn Yu.

The DOE has maintained that oil should be drawn from Malampaya even if it would just be 28 to 30 million barrels.

"We still have to get it out for the country’s use. But it has to be taken out soon, as it will be harder to bring that out later when the gas pressure drops," Energy Undersecretary Peter Anthony Abaya said earlier.

Eduardo Mañalac, president of Malampaya consortium member PNOC (Philippine National Oil Co.-Exploration Corp., also said it would still be feasible to draw oil from Malampaya in April 2006, although it would be quite difficult due to delays in forming a consortium that would do it.

Mañalac said the government is having difficulty in finding a technically capable firm to extract oil from the Malampaya field because of the high degree of expertise needed.

"There are many interested investors," he said. "It’s a question of whether or not these investors are experienced enough. We need to be very sure so as not to jeopardize the gas production."

PNOC-Exploration Corp., which holds a 10-percent interest in the Malampaya consortium, is looking for entities that would help it develop and operate the Malampaya oil rim.