Stable fiscal regime needed for energy exploration activities

MANILA, Philippines — Philippine oil and gas contractors are pushing for a long-term stable fiscal environment to enable more exploration activities to discover and develop indigenous resources to meet the country’s growing demand for energy.

Petroleum Association of the Philippines (PAP) president Don Paulino said studies show that the country’s energy requirements would double in 20 years and to help meet this increased demand, the government should ramp up tapping energy sources that are indigenous or native to the Philippines.

“There have been a lot of studies in the past and one such study says that GDP growth is strongly correlated to energy demand and vice versa,” he said. ”Therefore, we need energy to grow the Philippines,” he said.

However, new explorations can take place in the country only if there is a stable fiscal environment.

“We must first have a longer-term stable fiscal environment before we can expect investors to come in and help in looking for new indigenous energy sources,” Paulino said. “A lot of things play out in this, including the COA issues and the TRAIN 2 tax reform law.”

He was referring to the Commission on Audit’s decision in 2009 to slap a P53.14-billion tax deficiency from the Malampaya project operated by Shell Philippines Exploration B.V., Chevron Malampaya LLC and the Philippine National Oil Co. Exploration Corp.

Meanwhile, the Tax Reform for Attracting Better and High-Quality Opportunities (TRABAHO) bill seeks to rationalize fiscal incentives, which may repeal the perks under Presidential Decree 87, or perks to promotes the discovery and development of the country’s indigenous petroleum resources.

Paulino said the government must also quickly resolve the country’s geo-political issues with its neighboring countries so that new explorations can be done without much hindrance.

In fact, Malampaya lead operator SPEX is interested to make further investments in the country’s oil and gas sector.

Shell Philippines country manager Cesar Romero said they are looking at various territories outside Service Contract (SC) 38 or the Malampaya project especially if there is clarity in the fiscal regime.

“As part of an effective and efficient energy company, we maintain a dossier of areas we’re interested in, not only in the Philippines,” he said.

“Shell remains interested in exploring. We’re prepared to make investments in existing, new fields,” Romero said.

Energy Secretary Alfonso Cusi said the ever-rising demand for power supply in the country warrants an aggressive approach to develop its energy resources – one of which is petroleum.