posted January 15, 2016 at 11:45 pm by Alena Mae S. Flores
Otto Energy Ltd. of Australia is
leaving the Philippines to focus on oil and gas exploration in the US and
Africa, a source said Friday.
“Otto is exiting from all its
Philippine assets,” the source said.
Otto confirmed in its quarterly
report that it “commenced structured exit from Philippine assets.”
The company plans to sell its stake
in service contract 55 southwest off Palawan, after seeking a two-year
moratorium in exploration with the Energy Department.
It is also exiting SC 73, or the
offshore Mindoro-Cuyo prospect, which was awarded to the company in 2013, the
source said.
The source said Otto Energy planned
to develop other assets with “better potential” in other areas.
SC 55, which contains the Cinco
prospect, has a strong potential and requires investment from large oil and gas
companies. The contract involves the exploration, development and
exploitation of petroleum resources in the offshore area of southwestern
Palawan covering about 9,880 square kilometers.
“Otto sold Galoc when oil prices
were high and not long after, oil prices started tumbling down. This enabled
Otto to buy better assets in the US, particularly in well-known oil regions
such as Alaska and Louisana,” the source said.
He said Otto Energy had also acquired
assets in East Africa “with better potential than its Philippine assets.”
“While it had discovered gas at the
Hawkeye prospect in SC 55, it’s not big enough to be commercial.
Nonetheless, the discovery of gas at Hawkeye is very significant for the
Philippines because it enhances the prospectivity of the nearby Cinco prospect
which was what BHP believed to be gas prone and was prepared to drill before it
pulled out in 2013,” the source said.
The source said Cinco and other gas
leads in SC 55 would be large enough to replace Malampaya, “but it will take
major oil companies much bigger than Otto to effectively explore and develop
these gas prospects.”
The source also said that with
plunging oil prices, oil companies were not keen on asset acquisitions, including
SC 55.
“The low oil price regime is good
for consumers but it is indeed bad for the oil industry because oil companies
stop exploiting,” he said.
Otto Energy earlier asked the Energy
Department for a two-year moratorium in exploration activities under SC 55.
The consortium said it had already
fulfilled its work work obligation under the current exploration sub-phase by
drilling the Hawkeye-1 exploratory well in August.
Otto Energy plugged and abandoned
the Hawkeye-1 exploration well after declaring it non-commercial.
The Hawkeye prospect contains best
estimate of 480 million barrels of oil and best estimate net prospect resource
of 47 million barrels of oil.
The Cinco prospect, also located at
SC 55, is estimated to contain up to 2.9 trillion cubic feet of gas.
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