The Department of Energy (DOE) and the PNOC-Exploration Corp. (PNOC-EC) are calling for the speedy resolution of legal issues hounding oil exploration which they said would be crucial in securing the country’s energy supply.
They said solving the legal bottlenecks will be a big push in the bid for the expansion of indigenous energy exploration in the country.
Both feared the decline in the gas reservoir pressure of Malampaya deepwater gas-to-power project would turn into an energy crisis.
The Supreme Court (SC) is yet to resolve legal questions that can affect interests for future upstream explorations, one of them involving the income tax treatment on the Malampaya consortium questioned by the Commission on Audit (COA). In 2019, a $1.1-billion tax arbitration case was settled in the International Chamber of Commerce (ICC) in Singapore in favor of the Malampaya consortium.
The issue started in 2009, when COA insisted Malampaya consortium’s income tax is not included in the government’s 60 percent share of earnings in the gas-to-power project which resulted to an undercollection from 2003 to 2009.
The consortium then filed with the SC a petition for certiorari to review COA’s findings.
A petition for review filed before by the DOE and the contractors found the government’s share of 60 percent of the net proceeds included corporate income taxes.
DOE was supportive of the ICC decision but said the Office of the Solicitor General would have to enforce the resolution with COA.
“We have to re-emphasize that everything goes together: legal, executive, and judicial. We are pushing for the expansion of exploration areas. We are making it more attractive to investors. At the end of the day, the judiciary will be the judge,” said Energy Undersecretary Felix William Fuentebella, at a virtual forum organized by the Joint Foreign Chambers of the Philippines.
PNOC-EC president Rozzano Briguez said the company is “looking at a very good prospect” but “legal aspects with our laws and regulations” are preventing their utilization.
Fuentebella added: “We have to tell the judiciary that exploration is also important. The Constitution tells us to explore and develop our own indigenous sources. We need to utilize all our resources as well. The way forward is to develop all options.”
He said the DOE has the mandate to explore more energy options, including indigenous energy resources as well as imported ones like liquefied natural gas while also nominating areas for exploration within the country’s jurisdiction subject to the legislative body’s approval.
Meanwhile, Briguez said more drilling activities are needed to develop the country’s own indigenous resources as these can boost the availability of collected data on prospective gas and oil reserves.
“While we are waiting for the depletion of Malampaya, Malaysia has discovered seven times more just by drilling. It is important to make the investment climate, to make the operational data enticing. We need a good grasp of prospectivity so that investors will know,” he said.
There are 19 active petroleum service contracts in the Philippines with Shell Philippines Exploration, Total E&P, PNOC-EC, Nido Petroleum, Philodrill, PXP Energy and Galoc Production Co. as operator-partners. -Jed Macapagal
