DOE bares 4 oil exploration projects in West Phl Sea

MANILA, Philippines - The Department of Energy (DOE) received four bids for three petroleum blocks in the resource-rich northwestern Palawan near the disputed Spratly Islands in the West Philippine Sea.

The second and final leg of bid opening capped the Philippine Energy Contracting Round (PECR) 4, which attracted a total of 24 offers for 15 petroleum projects.

“We have four bids in three areas composed of six companies. It is a good indication, especially for PECR 4,’ said DOE Undersecretary Jose Layug Jr.

Local firm Helios Petroleum and Gas Corp. submitted the lone bid for Area 3 (600,000 hectares). Bidders for Area 4 (616,000 hectares) were Helios Petroleum and the consortium of Philippine National Oil Co.-Exploration Corp., Philex Petroleum Corp. and PetroEnergy Resources Corp.

The consortium of Pitkin Petroleum Plc and listed energy firm Philodrill Corp. submitted an offer for Area 5 (424,000 hectares).

All bids were qualified for technical evaluation by the DOE.

“You do not anticipate too many bids from many companies because of the huge capital expenses for these projects,” Layug said.

“Normally, bids come from medium-sized companies, what usually happens is after the seismic studies, the big boys come in,” Layug said.

In July last year, the DOE launched PECR 4, offering 15 new petroleum exploration areas nationwide that would require around $7.5 billion in investments.

The DOE received on April 16 bids for nine of the first 12 areas up for offer.

The DOE accepted 13 bids for technical evaluation, which includes checking the proposed work program.

Layug still saw robust investor participation despite Chinese claims on the resource-rich but disputed Spratly Islands that is close to Areas 3 and 4.

China maintains that the waters around the Spratlys have been a traditional Chinese fishing ground.

The Philippines insists that the Panatag (Scarborough) Shoal is within its 200-nautical mile exclusive economic zone based on the UN Convention on the Law of the Sea.

“I think we have sufficiently attracted investors to come to the Philippines and explore for oil and gas,” Layug said.

In the past three PECRs, the DOE received only 12 total bids, lower than the 20 for PECR 4.

Layug attributed the private sector interest on high oil prices and government transparency.

To date, there are 27 petroleum service contracts in the Philippines involving Shell Philippines Exploration, Nido Petroleum, Galoc Production Co. and BHP Billiton.

“The Philippines is relatively under-explored compared with our neighbors,” Layug said.

If awarded, the 11 petroleum areas that received bids might require around $4 billion for exploration alone, Layug said.

Awarding of the first batch of service contracts is expected in the next 60 days.

Layug said the DOE would assist the service contractors in securing local permits and licenses to fast-track exploration works.

Moving forward, the DOE will conduct a new PECR for other petroleum blocks.

“We need to enhance our data to make sure interested parties will have a better idea on what is available in the area,” Layug said.

The DOE is pursuing energy independence and sustainability through the development of indigenous energy resources like coal, petroleum and natural gas.

Meanwhile, the Ministry of Defense of China said the Chinese military buildup in the South China Sea (West Philippine Sea) and in nearby areas is not aimed at any other country.

Geng Yansheng, China’s defense ministry spokesman, said in a statement carried by China’s state news agency Xinhua that Beijing opposes any military intervention in the hotly contested region over which it maintained it has indisputable rights. – With Jaime Laude