Phl upstream oil industry seen resurging

MANILA, Philippines - The country’s upstream oil industry is up for a resurgence given numerous drilling and expansion projects.

“We keenly anticipate a resurgence of the upstream petroleum industry in the Philippines,” said Petroleum Association of the Philippines (PAP) chairman Alfredo C. Ramos.

Ramos said this development is highlighted by “the commencement of the second phase of the Malampaya development.”

Last week, the consortium behind the Malampaya deepwater gas-to-power project started a $1-billion expansion program.

Phase 2 of Malampaya, which is operated by Shell Philippines Exploration B.V. (SPEx), will involve the installation of two new subsea gas wells by 2014 while Phase 3 is composed of the set up of new compressors and a platform that will be completed in 2015.

Ramos said other major factors that provided a boost to the sector are “the awarding of the contracts in the last Philippine Energy Contracting Round (PECR), the development of the Cadlao field and the drilling of more exploratory wells.”

The PECR 4 auctions in April and July attracted 20 offers for 11 petroleum blocks and 69 bids for 28 coal areas. The new service contracts were earlier scheduled to be awarded late this year.

In July last year, the Department of Energy (DOE) launched PECR 4, offering 15 new petroleum exploration projects and 38 coal blocks nationwide that will require around $7.5 billion in investments.

For drilling projects, upstream oil firms Cadlao Development Co., Ltd. (Cadco) and VenturOil Philippines Inc. allotted $47 million to bring the Cadlao oil field in Northwest Palawan to commercial operations next year.

Ramos said the country is underexplored amid the need for petroleum, a strategic commodity essential in all forms of modern socioeconomic activity.

At least five oil and gas service contract areas in the country will be subject to various drilling works for 2013, DOE data showed.

To date, there are 27 service contracts in the Philippines involving SPEx, Nido Petroleum and BHP Billiton. However, only the Malampaya and Galoc oil fields are in regular production.

The Philippines produces only 6,000 barrels of oil per day, way below the demand of around 300,000 barrels per day, according to DOE data.