Tuesday, July 25, 2017

Cusi lays down framework on 6th oil contracting round

Published July 24, 2017, 10:00 PM By Myrna M. Velasco

In the country’s do-or-die quest for new commercial-scale petroleum find, Energy Secretary Alfonso G. Cusi indicated that he will be issuing the framework of his department’s target for the sixth contracting round by year-end.
 “We’ve already identified the areas, and I just issued an order that we will already do round 6,” he told reporters, referring to the Philippine Energy Contracting Round-6 (PECR-6) which is the auction platform set for the upstream oil and gas blocks being offered to investors by the Philippine government.
Cusi added the timeline will also be sparingly fleshed out based on what the Department of Energy (DOE) ascertained as ‘suitable timing’ in undertaking the petroleum auction round.
He similarly pointed out that approvals on the final outcome of the pending award of contracts under the last bid process in PECR-5 are also being resolved both with the Department of Finance and MalacaƱang.
In a separate interview, Finance Secretary Carlos Dominguez III hinted that the go-signal from their end on the PECR-5 winning offers would definitely be forthcoming.
“We’re reviewing them (contracts) – we’re going through the process and they are due for approval,” the finance chief said, emphasizing that they do not see any contentious issues on them so far.
The go-signal on the award of the PECR-5 contracts had been referred to the finance department for review – since the past administration yet; and from that, the DOE would still need to secure final round of approval from the Office of the President.
For the PECR-6, energy department officials have previously sounded off that the blocks to be offered would be those in the West Philippine Sea, Palawan basin and Sulu Sea.
Past the well-known delay in the award of the PECR-5 contracts, the energy department also contends with ‘tax regime’ uncertainties in the upstream oil and gas segment of the industry following the arbitration proceedings on the Malampaya case.
With the Commission on Audit’s differing interpretation on the income tax treatment in the royalty share of the service contractors, the entire industry got baffled with ‘policy riskiness’ that they can no longer decide with ease whether or not to go ahead with their planned ventures in the Philippine upstream petroleum sector.
Another concern perplexing investors has been the ‘diplomatic strife” at the West Philippine Sea, that despite the country’s more friendly relations with China at this time, their worries have yet to be calmed down.
Those domestic concerns plus the prolonged collapse in global oil prices have slowed down ventures in petroleum discoveries – that definitely had its spillover effect in Philippine shores.

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