Cadlao oil field in Palawan to be developed next year

MANILA, Philippines - The Cadlao oil field in Northwest Palawan will be redeveloped for possible production next year.

The Cadlao field previously produced up to 11 million barrels of oil back in the 1980s before it was plugged in 1991.

According to Energy Undersecretary Jay Layug, interest in reviving oil fields have intensified with the unhampered increase in world oil prices.

“We have marginal fields that are becoming more economical to draw out the oil,” Layug told reporters.

A consortium led by Australia-based Blade Petroleum Philippines Ltd. is now developing the field through Service Contract Blade Petroleum owns an 80 percent equity interest in SC 6 and is operator of the field while VenturOil owns the remaining 20 percent.

Blade Petroleum entered into an agreement with Phoenix Energy Corp. for the sale of 44.9437 percent equity interest in SC 6. This acquisition was approved by the Energy Department in October 2007.

Blade acquired the remaining 55.0563 percent of SC6 and operatorship in July 2008 from Oriental Petroleum. This acquisition was approved in September 2008, bringing Blade’s interest to 100 percent.

VenturOil farmed into 20 percent of SC 6 in September 2008, reducing Blade’s participating equity interest to 80 percent.

“In fact that is what we are seeing now. For example Cadlao, which was already abandoned in the past, it is now being developed by a new consortium,” Layug added.

Compared to its peers in the region, the country’s upstream oil and gas industry is relatively small. This has been generally attributed to the high cost of development along deep seas and the quality of reserves that have been discovered.

It would be recalled that ExxonMobil, the world’s largest publicly-traded international oil and gas company, recently dropped its bid to develop a petroleum block in the Sulu Sea after deeming potential reserves to be of “non-commercial quantities.”

But nonetheless, energy officials still believe that there is still interest from foreign and domestic investors.

The country’s small oil fields have, in fact, been getting interest from investors amid the high oil price environment.

Layug said that marginal oil fields that have been abandoned have attracted petroleum exploration and development companies looking to cash in on the commodity.