DOE circular provides for cost recovery, new plays, etc.
The Department of Energy (DOE) has issued a circular granting special allowances to petroleum service contractors in a bid to attract more investors to the country.
The agency revealed details of the circular, which was signed by Energy Secretary Sharon Garin on September 23 but made public only on Tuesday, September 30, 2025. It stated that allowances will be provided for cost recovery, marginal petroleum operations, new plays, frontier areas, gas development in remote areas, and gas production.
The circular explained that petroleum service contractors shall be entitled to these special allowances, which will be applied by deducting the applicable allowance(s) from the gross proceeds.
Funding for the allowances will be drawn from the government’s royalty share from petroleum service contracts, but this share shall not fall below 60 percent when calculated based on the difference between gross income and operating expenses.
The document stated that the special allowance for cost recovery is intended to spur exploration activities and encourage producing service contractors to invest in exploration under other service contracts.
Regarding the special allowance for marginal petroleum operations, the DOE said it will enable contractors to maintain or continue such operations. Meanwhile, the allowance for new plays aims to encourage the discovery of petroleum sources in untested geologic formations within productive areas, but will be granted only to the first commercial developer in a given location.
The special allowance for frontier areas is expected to promote the development of petroleum fields in regions with no significant production activity, as determined by the DOE. This allowance will also be granted solely to the first commercial developer.
Additionally, a special allowance for gas development in remote areas will be provided to encourage the development of gas fields located more than 200 kilometers from the identified delivery market. Again, this will be awarded only to the first or foundational developer in such areas.
Lastly, the circular stated that a special allowance for gas production will be granted to support the production of indigenous gas in new plays, frontier areas, or remote locations—but only to the first or foundational project developer in each case.
