Japan-Kuwait group to search for oil in Tanon Strait

Japan Petroleum Exploration Co. Ltd. (Japex) and Kuwait Foreign Petroleum Exploration Co. (Kuwait Petroleum) are investing $12.7 million for oil and gas exploration works near the Tanon Strait in Central Visayas.

This was confirmed following the approval of  the  Department of Energy (DOE) of the farm-in agreement between the two companies.

Under the agreement covered by service contract (SC) 46, Japex will own 65 percent of the venture with Kuwait Petroleum acquiring the balance of 35 percent.

Kuwait Petroleum is engaged in the exploration, development and production of crude and natural gas. It operates in South Africa, Indonesia and Tunisia.

Its interest in the Philippines is in line with its aim to increase its production capacity to 100,000 barrels of oil per day (BOPD) by 2010, an increase from its current capacity of  around 35,000 BOPD.

The DOE awarded the contract to Japex earlier this year. The group has recently completed initial seismic studies and is currently processing and evaluating the data it gathered.

Japex and Kuwait Petroleum will be spending an initial $1.7 million for the seven-year exploration period.

Japex has extensive international exposure in oil and gas exploration.  In the 1990s, Japex started production in the Daleel field in Oman, ABS field in North Sumatra and Lufeng 13-1 field in the South China Sea.

In March 1995, Japex participated in the establishment of Sakhalin Oil and Gas Development Co. Ltd., the Japanese consortium for the Sakhalin-1 project. In 1999, Japex pilot tested the production of oil sands in Alberta, Canada.

Once the reserve is proven to be of commercial quantity, the contractors are given another 25 years for the production period.

The approval by the DOE of  SC 46 is part of the committed contracts for petroleum exploration which this year rose to P2.5 billion  from only P1.3 billion last year, following the decision of the Supreme Court that affirmed the constitutionality of the Mining Act of 1995.

"The increased investments should get us closer to being less dependent on imported energy sources. These activities under the new petroleum service contracts will also generate high quality employment and would greatly increase our chances of finding additional oil and gas reserves within our territory," said Energy Secretary Raphael P.M. Lotilla.

DOE data show that the country’s current petroleum reserves stand  at 168 million barrels of oil, 3,841 billion cubic feet of gas and 109 million barrels of condensate.  Additional mapped undiscovered resources, on the other hand, are estimated at 1,341 million barrels of oil, 8,112 billion cubic feet of gas, and 55 million barrels of condensate.

Lotilla said since  the SC decision last December, the DOE has awarded eight petroleum exploration service contracts while five applications are currently being evaluated.