October 22, 2018 | 10:19 pm
https://www.bworldonline.com/doe-threatens-to-revoke-firms-rights-to-palawan-exploration-concession/
THE Department of Energy (DoE)
threatened to revoke the rights of Colossal Petroleum Corp. to a service area
off the Palawan coast if it does not submit its work plan after winning Area 5
during the department’s last petroleum contracting round in 2014.
“If they do not push through with
Area 5, which they won in PECR (Philippine Energy Contracting Round) 5, their
proposal might be cancelled or [they might be] disqualified,” DoE
Undersecretary Donato D. Marcos told reporters after a forum at the Manila
Hotel on Monday.
DoE Secretary Alfonso G. Cusi, who
was with Mr. Marcos, concurred, and called on Colossal to agree to abide by the
outcome of a legal ruling that could determine the viability of the service
contract.
Mr. Marcos said his office will send
a letter to Colossal within the week to set terms.
The legal case pertains to a ruling
from the Commission on Audit (CoA) that the government cannot assume the income
tax due from the consortium operating the Malampaya gas-to-power project.
Consortium members questioned the ruling, the resolution of which is pending
with the Supreme Court.
Colossal, which Mr. Marcos described
as a Filipino-led company, was among the winning bidders of the areas offered
by the previous administration for exploration under PECR 5. Israeli firm Ratio
Petroleum Ltd. won a separate exploration area under the same contracting
round.
Mr. Cusi said the awarding of the
contracts has been pending as problems emerged, including the CoA ruling. The
PECR was established as a transparent and competitive system of awarding
service or operating contracts for prospective petroleum or coal areas.
“We tried to untangle all those
problems, including the CoA issue,” Mr. Cusi said, adding that Ratio agreed to
abide by whatever ruling the Supreme Court will issue.
Last week, Ratio was formally
awarded the petroleum service contract for Area 4 in the east Palawan basin
covering 416,000 hectares for potential oil and gas resources. Area 5, which is
within Philippine territory, and Area 7, which is within the disputed area with
China, were the ones won by Colossal.
“We cannot leave it hanging,” Mr.
Cusi said on the reason for the ultimatum for Colossal.
The DoE has been pushing for more
oil and gas exploration in the Philippines in view of the country’s heavy reliance
on imported fuel.
In the first half, the country’s
payments for oil imports rose by 34.4% to $6.312 billion in part because of the
peso’s depreciation against the dollar, making inward shipments of crude oil
and finished petroleum products more expensive.
In August 2017, the DoE issued
policy changes on energy exploration by doing away with the PECR and replacing
it with the Philippine Conventional Energy Contracting Program (PCECP). The
revised and transparent petroleum service contract awarding mechanism would
allow investors to bid for exploration projects through a competitive selection
process or by nomination.
The department has listed 14 areas
that prospective investors may bid for, which does not preclude them from nominating
other areas to develop subject to regulatory approval.
The identified areas are onshore and
offshore sites located in the Cagayan basin (one area), eastern Palawan (three
areas), Sulu (three areas), Agusan-Davao (two areas), Cotabato (one area) and
in western Luzon (four areas). All the areas are within Philippine territory.
The DoE has since conducted road
shows in Singapore, Palawan, Davao and Zamboanga ahead of the contracting
program’s launch in Manila in the third week of November.
“We’re looking for investors that
are really competent, both financially and technically,” Mr. Cusi said.
Yesterday’s Kapihan sa Manila Hotel
Forum was hosted by the Association of Philippine Journalists Samahang Plaridel
Foundation, Inc. — Victor V. Saulon
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