Department of Energy halts new oil, gas drillings

By Donnabelle L. Gatdula (The Philippine Star) Updated December 09, 2010 12:00 AM

MANILA, Philippines - New oil and gas drillings in the country will temporarily be halted after the Department of Energy (DOE) postponed the public contracting rounds on oil and gas contracts pending the resolution of a dispute with the Commission on Audit (COA).

Energy Secretary Jose Rene Almendras said the public energy contracting round (PECR) on coal and geothermal, however, will push through.

“We’re going to have a contracting round but without petroleum and gas. We decided to postpone it because of the COA situation. So we’ll still going to try to address that problem. We don’t want to push it unless we have addressed that, although there are many more areas available so we’ll push through with coal and geothermal,” he said.

“We were hoping that we would be able to push through with it pending the resolution, but recent meetings with COA have given us an impression that it’s probably best not to (push through with it) for the time being,” he added.

In 2003, the DOE launched PCR-1 offering exploration blocks near oil-producing areas in Northwest Palawan and in vast frontier basins in Southwest and East Palawan, Sulu Sea and Reed Bank to investors.

Continuing the gains of PCR-1, in August 2005, the DOE launched PECR 2005 wherein it offered investors opportunities for exploration and development not only of petroleum resources but also exploration and development of coal and geothermal resources.

However, it was learned that a COA report showed that the Malampaya consortium has allegedly shortchanged the government by about P53 billion.

Under the cost recovery program, the Malampaya consortium could recover 70 percent of its cost. After the project proponents recouped their costs, the government and the consortium will divide the remaining 30-percent revenues generated from the project. Of the 30-percent revenues, 60 percent will go to the consortium while the remaining 40 percent to the National Government.

The COA report apparently claimed that the consortium used the National Government’s royalties in the Malampaya deep water gas-to-power project in offsetting its payment of corporate income taxes.

COA said this resulted to revenue losses for the government for the period 2003 to 2009. This issue is now subject to a Congressional probe.