PNOC-EC awaits results of DOE review on deals
MANILA – PNOC-Exploration Corp. (PNOC-EC), the oil and gas exploration arm of state-owned Philippine National Oil Co., is awaiting the results of the Department of Energy’s (DOE) review of all petroleum service contracts before it proceeds with the development of the Camago-Malampaya Oil Leg in northwest Palawan.
The DOE review hopes to weed out non-performing contractors.
PNOC-EC wants to know whether the oil rim project will be affected by the review.
“The technical study is under study by our group. And we are looking at if Burgundy (Global Exploration Corp.) was able to satisfy the work program,” Gemiliano Lopez, PNOC-EC chairman and chief executive, said.
The Camago-Malampaya Oil Leg, also known as the Malampaya oil rim, is a 56-meter thick oil zone located below the 600-meter thick gas cap being produced by the consortium holding service contract 38 as part of the Malampaya Deep Water Gas-to-Power Project.
The oil rim, located within the Malampaya gas field covered by Service Contract 38 in northwest Palawan, is estimated to contain 20 to 40 million barrels of oil.
The SC 38 consortium, composed of PNOC-EC, Shell Philippines Exploration B.V. and Chevron Malampaya LLC earlier relinquished its right over the oil rim, saying it was “sub-commercial” in quantity. It is estimated to cost $1 billion to develop.
The oil rim was initially discovered with the drilling of Malampaya-1 well in 1991 but was considered as a separate development from the much larger natural gas reserves comprising the bulk of the Malampaya petroleum resources.
The Malampaya consortium is composed of PNOC Exploration, Shell Philippines Exploration B.V. and Chevron Malampaya LLC. The consortium relinquished its right over the oil rim, saying that it was “sub-commercial” in quantity.
Subsequently on July 2, 2008, PNOC-EC and local firm Burgundy signed a participation agreement, making Burgundy the operator with 84.9 percent interest in the project and PNOC-EC holding the remaining 15.1 percent.
“We will wait for the results of the DOE review on the service contracts. Normally, we will respect the contracts,” Lopez said.
Burgundy is a Filipino-owned corporation and a member of the Burgundy Group of Companies, which has vast experience in bringing foreign investments into the Philippines.
It forged a joint venture partnership with Union Fenosa Gas (jointly owned by Spain’s largest gas company and ENI of Italy), to explore and develop the oil and gas resources within the SC 62 area located in offshore eastern Balabac Island in the Sulu Sea.
DOE awarded Burgundy the contract to explore and develop area 5-block 1 and area 6- block 2 under SC 67 and SC 68. Areas 5 and 6 are located in the Sulu Seas southwest of Palawan.*PNA