DOE targets launch of new oil, gas contracting round in December

By Danessa Rivera (The Philippine Star) | Updated July 13, 2017 - 12:00am

http://www.philstar.com/business/2017/07/13/1718941/doe-targets-launch-new-oil-gas-contracting-round-december

MANILA, Philippines -  The Department of Energy (DOE) is targeting to launch a new contracting round for coal and petroleum contracts in December, two years after the fifth round in 2015, a ranking government official said yesterday.

This will be the sixth Philippine Energy Contracting Round (PECR) for petroleum and coal, DOE - Energy Resource Development Bureau assistant director Ismael Ocampo said in a briefing yesterday during the E-Power Mo: Energy Consumers and Stakeholders Conference.

“We are targeting December as our launching month,” he said. “Hopefully we’ll be discovering additional Malampaya reserve in the future.”

The DOE has yet to finalize areas that will be included in the sixth contracting round but this may include those in the West Philippine Sea, Sulu Sea and around Palawan province, he said.

“Blocks are not yet finalized. They’re under evaluation,” Ocampo added.

For those contracts located in the West Philippine Sea, the DOE will need to secure clearance from the Department of Foreign Affairs (DFA) first due to the ongoing territorial dispute with China, the DOE official said.

PECR is a transparent and competitive system for awarding service contracts to showcase the petroleum and coal exploration opportunities in the country and to attract energy investors into the country’s indigenous oil and gas resources.

Ocampo said the agency is putting bets on a better crude oil price environment toward the end of the year.

“It’s a gamble,” he said. “We are expecting that, if crude oil prices increase in December, then our PECR 6 will be more successful.”

The DOE last launched the PECR in June 2015, where it showcased 11 petroleum exploration contracts.

Under PECR 5, only two exploration companies passed the qualifying stage for three areas. Israel-based Ratio Oil Exploration submitted bids and qualified for Area 4, a 416,000-hectare area in East Palawan, while local company Colossal Petroleum qualified for the 576,000-hectare Area 5 in East Palawan and the 468,000-hectare Area 7 in Recto Bank.

A petroleum service contract has seven-year exploration period, which could be extended up to 10 years.

However, the DOE has not yet awarded the contracts to the qualified bidders following legal impediments in the oil and gas exploration industry such as Commission on Audit (COA) and Japan Petroleum Exploration Co. Ltd. (JAPEX) issues.

In 2015, COA upheld its 2009 findings that P53.14 billion in taxes were uncollected from the Malampaya project operated by Shell Philippines Exploration B.V., Chevron Malampaya LLC and the Philippine National Oil Co. Exploration Corp. (PNOC-EC).

Meanwhile, the Supreme Court declared SC 46 between the government and JAPEX as unconstitutional, raising concerns over the legality of service contracts.

The DOE is hoping to award the pending contracts before launching PECR 6, Ocampo said.

DOE Undersecretary Felix William Fuentebella said they have already made representations to the Cabinet and it is now with the Office of the President to form a national position for the country’s oil and gas sector.