The group signed recently Service Contract (SC) 60 with the Department of Energy (DOE) to signal the start of seismic and exploration work in the untapped oil prospects in the northeastern part of Palawan.
SC 60, converted from the geophysical survey and exploration contract (GSEC) 99, covers a relatively unexplored area of one million hectares.
Northeast Palawan is one of the promising sites for petroleum exploration identified by the Philippine Petroleum Resource Assessment Project Study conducted by the Norwegian Agency for Development Cooperation (NORAD) and the DOE.
Energy Secretary Raphael P.M. Lotilla said the new investment is hoped to result in a "successful petroleum find and help push forward the country’s drive for energy independence in the midst of surging oil prices."
The energy chief said this shows a continuing commitment by foreign investors to do business in the Philippine economy.
"We are hopeful about this SC. This only shows that we have a favorable investment climate in the Philippines. This is the second investment of KUPFEC. South China has shown persistence in bringing in foreign partners into the project," the energy chief said.
SC 60 provides for a seven-year exploration period for which the consortium has committed to invest a minimum of $24 million or about P1.27 billion. About $2 million to $3 million will be spent for the seismic study alone.
The consortium shall conduct, seismic and exploration work to find petroleum and optional exploration drilling within the first seven years.
SC 60 also includes a 25-year production term in the event of a commercial discovery of petroleum. The SC 60 consortium is led by SPEX with a 55-percent stake followed by KUFPEC with 30 percent and SCR 15 percent.
Signatories of SC 60 are Lotilla for the DOE, SPEX managing directors Keith Perrin and Paul van der Harten, KUFPEC deputy chairman and chief operations officer Abdullah M. Baroun, and SCR chairman Edgardo Reyes.
The consortium is a group with strong background in the upstream petroleum industry. SPEX is the operator of the $4.5-billion Malampaya Deep Water Gas to Power Project in Northwest Palawan, the biggest investment so far in the country’s oil exploration sector.
KUFPEC is a wholly-owned subsidiary of the Kuwait Petroleum Corp., owned by the State of Kuwait.
SCR is a Philippine company involved in, among others, hydrocarbon exploration.
SC 60 brings to 14 the number of service contracts signed by the DOE on behalf of the government since December 2004. These service contracts involve a total of $193 million in financial investments committed to work programs for the exploration of oil and gas in the country.