Published
By Myrna M. Velasco
Several firms are in
the roll of the Department of Energy (DOE) as prospective investors in new oil
and gas exploration ventures in the country, but their ‘real interest” would
only be known during the bid submission date in August.
And according to experts
and studies, the intrepidity of investors to inject fresh investment-dollars
into the country’s petroleum blocks will be measured vis-à-vis remaining
critical concerns such as the unresolved diplomatic tussle at the West
Philippine Sea (WPS) and the yet-to-be finalized ‘partial award’ on the
arbitration case of the multi-billion Malampaya project.
Amid these concerns,
global analyst like the Harshavardhan Reddy Nagatham indicated that the
Philippines is confronted with the pressing need for immediate capacity shoring
up on its power supply,” with it stressing that “the growing population is
driving electricity consumption.” And without addressing that promptly, this
country may be plunged into unwarranted brownouts again.
Analysts have similarly
propounded that for the sake of energy independence and security, future power
capacity for the country could be best addressed with indigenous resources,
such as any residual gas from the Malampaya field that it could still extract
beyond 2024.
“The problems in the
country’s oil and gas exploration initiatives only make the situation worse as
investors have been taking a wait-and-see stance due to currently unresolved
issues that pit the government auditors against the Department of Energy,” it
was noted.
Relative to the ruling
of the International Chamber of Commerce (ICC) on the Malampaya case to be
fully resolved and implemented, it needs a local court ruling – and this is
perceived best initiated by the DOE so investors could take on the right signal
on matters of policy enforcement.
As noted by First
Solutions Macro Research, a unit of the Fitch Group, the oil dependency of the
Philippines across its energy sub-segments already hovers at significant
48-percent, hence, non-replacement of gas resource from the Malampaya field
could further erode the country’s energy independence.
It was emphasized that
“although many investors have expressed interest on doing oil and gas
exploration in the Philippines, very little headway has been achieved towards
transforming this interest into concrete steps.”
The Fitch report
further stipulated that “the Philippines remains in dire need of more oil and
gas exploration as existing reserves decline and as its sole producing
Malampaya gas-to-power project approaches the end of its production life.” The
Malampaya field accounts for 98-percent of the country’s oil and gas
production.
And Fitch stated the
situation may even turn worse “due to a growing demand for refining feedstock –
next to continued declines in oil and gas production.”
The investing
consortium-members of the Malampaya project as governed by Service Contract 38
already sounded off keen interest to continually pursue exploration activities
and extend the life cycle of the Malampaya field – but it needs firm decision
and approval from the DOE on its license extension for this to happen.
The Malampaya service
contract expires in 2024, but gas-production cycle could still be stretched
until 2030 at best provided the SC 38 license is extended.
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