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The government expects to extract oil reserves in the northwest Palawan basin beginning in 2026, a year before the Malampaya gas field dries up.
During the Senate budget hearing, Philippine National Oil Co.-Exploration Corp. (PNOC-EC) President Rozzano D. Briguez said drilling activities for the Service Contract (SC) 57 would begin next year, with an expected production date of 2026.
“By the fourth quarter of next year, we can start drilling. If we are lucky, by 2026 or early 2027, production of the SC 57 will begin, ”he said.
SC 57, which was awarded to PNOC-EC in September 2015, covers a total area of 7,200 kilometers on the northwest coast of Palawan and is located about 50 km northwest of the extreme northwest of Busuanga Island.
Briguez said the government would accept a partner by assigning one part of the contract to another for development. “Yes, we are inviting others to join,” he said.
A rights purchase agreement must be finalized prior to drilling activities. Briguez said potential oil reserves in the area are “estimated at two-thirds of Malampaya.”
The Malampaya gas field has proven reserves of around 2.7 trillion cubic feet of natural gas reserves and 85 million barrels of condensate.
“With the new EO [Executive Order] 80, we will be earning 70 percent. Then we will be winning. We are 100 percent owned. If we get 70 percent, we will retain 30 percent, ”PNOC officials explained to the senators.
CNOOC?
It did not say whether China National Offshore Oil Corp. (CNOOC), which previously entered SC 57, would secure 70 percent interest.
It should be remembered that in April 2006, CNOOC acquired a 51 percent stake and the operation in SC 57, while Mitra Energy participated in March 2006, obtaining 21 percent. The Deed of Assignment to formalize its entry has not yet been approved, after the issuance of an EO during the Arroyo administration that prohibits the PNOC from granting farm-in and farm-out agreements for oil exploration, development and production.
However, this EO was repealed with the issuance of another EO last year by President Duterte. EO 80 paves the way for PNOC-EC to partner with another company to implement SC 57.
Furthermore, with the recent lifting of the moratorium on oil and gas exploration activities in the Western Philippine Sea, CNOOC’s partnership with PNOC-EC for SC 57 can now move forward.
Apart from SC 57, other contracts that were affected by the moratorium include SC 59, 72 and 75.
Charcoal blocks
Meanwhile, PNOC-EC is requesting coal blocks in Malangas, Zamboanga Sibugay. Your request is subject to a counter offer, the Department of Energy (DOE) said.
PNOC-EC said in July it would prioritize projects that are expected to generate profits. These projects include oil exploration and coal power.
PNOC-EC has four coal exploitation contracts (COC): COC 41 (Malangas), COC 122 (Isabela), COC 185 (Buug-Malangas) and COC 186 (Imelda-Malangas). It also markets coal through its coal terminal located in Malangas, Zamboanga Sibugay.
The company, chaired by the Secretary of Energy Alfonso Cusi, also participates in the following oil services contracts: SC 37 (Cagayan), SC 57 (Calamian), SC 58 (West Calamian), SC 59 (West Balabac), SC 63 (East Sabina), SC 74 (Northwest Palawan) and SC 75 (Northwest Palawan).
More importantly, PNOC-EC has a 10 percent stake in the Malampaya deepwater gas-to-power project under SC 38.
“PNOC-EC will prioritize projects with higher projected revenue or faster ROI [return on investment]”Briguez had said.
