DOE sees P3.5-B investments in oil industry
Source: 09-MAY-2008 Intellasia | Philstar.com
May 9, 2008 - 7:00:00 AM About P3.5 billion worth of fresh investments is expected in the next seven-years as the Department of Energy (DOE) awarded five petroleum exploration service contracts (SCs).

Four local oil exploration companies-Miocene Mining and Energy Corp (MMEC), Helios Petroleum and Gas Corp (HPGC), Burgundy Global Exploration Corp (BGEC) and NorAsian Energy Limited (NEL)-have signed their respective contracts with the DOE to undertake onshore and offshore exploration in five sites under the Philippine Energy Contracting Round (PECR) of 2006.

MMEC was awarded SC 65 (Area 1-Cagayan Block), HPGC was awarded SC 66 (Area 8-Agusan Davao Basin), BGEC was awarded two oil exploration contracts, SC 67 and 68 in East Palawan (Area 5-Block 1 and Area 6-Block 2), and NEL was awarded SC 69 (Area 8-Visayan Basin).

The P3.5 billion or US$79.2 million of new capital will add to the US$456.85 million projected exploration investment since 2004. There are now 33 active SCs in the country.

MMEC plans to conduct a seizmic survey and drill two wells in SC 65 with total investment for its seven-year work programme of US$7 million to US$21 million.

BGEC bagged the contracts for Areas 5 and 6 located in the Sulu Sea southwest of Palawan. It plans to acquire seizmic data and drill four wells in each of the areas with investments totalling US$21.7 million for each area.

HPGC will undertake drilling activities in Area 9 located in the northeastern portion of Mindanao. The company will spend some US$6.55 million for its proposed drilling programme within the next seven-years.

MMEC, HPGC, and BGEC are members of the Burgundy Group of Companies, which has vast experience in bringing much needed foreign investments into the Philippines.

In 1992, Burgundy brought into the Philippines the US$32 billion Jupiter Funds, an asset management company based in London and Bermuda. Part of the funds is allocated to petroleum exploration and production in the Philippines, especially in the deep-water areas of Palawan and Sulu Sea.

"With Burgundy's initial seed money of US$300 million, the Filipino people are looking forward to a vibrant upstream petroleum industry which will be a catalyst to the growth of the country's economy," the company said.

On top of the four SC that it won, BGEC was earlier granted SC 62 and SC 61 in offshore East Balabac and offshore East Palawan, respectively, under the PECR 2005.

In partnership with Trans-Asia Oil of the Phinma Group, NorAsian, on the other hand, will explore Area 6 in offshore Central Visayas surrounded by the islands of Cebu, Bohol and Leyte. The conduct of seizmic study and drilling of one well will cost NEL some US$11.2 million.

NorAsian is a wholly-owned subsidiary of Perth-based Otto Energy Ltd It currently has exploration activities in SCs 50, 51 and 55.

"If successful, this will be the first exploration to produce oil in the Visayas sea," said NorAsian chair and president Rufino Bomasang, a former Energy Undersecretary and president of the Philippine National Oil Co (PNOC).

Bomasang said the awarding of the contracts was timely amidst the continuing rise in global crude prices.

"At this time of rising crude prices, it is imperative to work with the DOE to look for oil in the Philippine waters," he said.

Reyes, meanwhile, stressed that the Philippine government is continuously encouraging the private sector to participate in its energy independence programme that aims to reduce overdependence on imported fuels.

"Through intensive petroleum exploration, the DOE hopes to find additional reserves to supply the local demand. With the awarding of these five new SCs, the DOE expects to fulfill its mission and vision of ensuring sustainable stable, secure, sufficient, accessible and reasonably priced energy," he said.