Despite tax, pipeline issues, Shell to stay here

MANILA, Philippines - Despite problems it is facing on the downstream oil sector, the Royal Dutch Shell Group is continuing its venture in the upstream petroleum business in the Philippines.

Its local unit, Pilipinas Shell Petroleum Corp., is beset with issues regarding taxes and pipeline leaks.

In a disclosure to the Philippine Stock Exchange, a consortium led by Shell Philippines Exploration B.V (Spex) reported that it will continue the survey of its Service Contract 60 in the Sulu Sea.

David Baladad, South China Resources Inc. vice president for operations, said the company and its partners, Kuwait Foreign Petroleum Co. (KUFPEC) and Spex, will conduct the survey soon.

“The survey is expected to commence within the second half of November 2010,” he said.

Spex holds a 55-percent stake in the exploration block while KUFPEC and South China holds the remaining 30 percent and 15-percent interest, respectively.

Aside from the Shell-led consortium, ExxonMobil Exploration and Production Philippines B.V., the local unit of US oil giant ExxonMobil, is also conducting exploration activities in the Sulu Sea.

According to Baladad, Electromagnetic Geoservices ASA will undertake the survey using the vessel “BOA Galatea”, which will employ a proprietary remote sensing technology to search for traces of petroleum resources.

He said this SC covers an offshore area of over one million hectares. This area is considered one of the promising sites for petroleum exploration in the country, based on a joint study conducted by the Department of Energy (DOE) and the Norwegian Agency for Development Cooperation.

It would be noted that consortium of SC 60 completed drilling the Silangan exploration well in the area in August to a depth of 2,696 meters.

Earlier, South China said the positive outcome on the Silangan well “will result in an accelerated exploration program which should entail a new 3D seismic program and/or additional wells.”