SPEX withdraws from Palawan venture

MANILA, Philippines - Shell Philippines Exploration B. V. (SPEX) has pulled out its investment in the Service Contract (SC) 54B exploration area off Palawan, a report said.

In a report to the Australian Stock Exchange, Nido Petrolem Ltd. said SPEX has decided to withdraw its participation in SC 54B (which includes the Pawikan prospect), for undisclosed reasons.

Following SPEX’s withdrawal from the block effective Dec. 30, Nido will now own 60 percent of SC 54B while another Australian firm, Kairiki Energy Ltd., will own the remaining 40 percent.

Prior to the withdrawal, Shell owned 45 percent of the block; Nido, the main operator, 33 percent; while Kairiki had 22 percent.

According to industry sources, large exploration firms such as SPEX are eyeing bigger prospects.

“The SC 54B block may be small for their standards. Like Exxon, even if the field has been found to contain petroleum reserves, Shell may be looking for a bigger find,” the sources said.

Despite SPEX’s move, Nido chief executive officer Jocot de Dios said they would be pushing through with the development of SC 54B.

“We remain optimistic on the prospectivity of the block especially by the potential exploration upside identified in the large Pawikan lead to the south of the Gindara-1 location and only 10 kilometers from the producing Nido A and B fields. The recently acquired Pawikan 2D seismic survey is designed to mature this lead to prospect status and a potential future drilling opportunity. Preliminary seismic data from the Pawikan survey is encouraging,” De Dios said.

He said they are also not in a hurry to conduct more drilling activities at the SC 54B.

“Importantly, there are no drilling commitments required in SC 54B before the expiry of the service contract in August 2013, so the timing of the drilling of a Pawikan well, should the joint venture decide on this, would be at the SC 54B partners’ discretion,” he said.

In January 2011, the consortium led by Nido and SPEX got an approval from the Department of Energy (DOE) to explore SC54B. This paved the way for the drilling of the Gindara well. SPEX contributed 75 percent of the Gindara-1 exploration well cost and seismic costs.

The consortium, however, plugged and abandoned the Gindara well in June after finding it “water bearing.”

The Gindara prospect lies approximately 50 kilometers immediately south of the SPEX-operated Malampaya gas field in SC 38, the largest discovery made in the Philippines to date and currently on production.

SPEX is a member of the Royal Dutch Shell Group which has companies operating in more than 90 countries and territories. Its businesses includ oil and gas exploration and production;liquefied natural gas and gas to liquids production; oil product marketing and production, and chemicals and renewable energy projects.