Apart from the recent tax dispute involving the Malampaya project, low global oil prices and the geo-political issue at the West Philippine Sea have affected investors’ willingness to invest in the country’s oil and gas exploration projects, an industry expert said.
Arthur Saldivar-Sali, Geotecnica Corp. president and chief executive officer, said such headwinds are among the reasons why the Philippines has not been able to develop indigenous oil and gas prospects.
Sali added unstable policy pronouncements have also led foreign investors to lose interest.
“We need to focus and think out of the box…The present service contract system has taken out the total cost recovery program and from what I understand, that incentive was removed,” Sali, who also served as deputy director of the Bureau of Energy Development at the Ministry of Energy in the ‘80s, said at the Power Trends 2019.
He mentioned that it could also be the reason why Myanmar and Thailand, compared to the Philippines, are still attracting up to 10 oil drilling activities annually despite the low global oil prices.
Earlier, the Department of Energy (DOE) said the country potentially has 3.5 billion barrels of oil deposits and 24.7 trillion cubic feet of gas deposits that are considered undiscovered.
Of that, only 4.6 percent or 168 million barrels of oil and 3.8 trillion cubic feet of gas had been discovered since 2016.
The DOE expressed optimism that interest for local oil and gas explorations will now be revived as the Malampaya tax issue was resolved and after it recently conducted the Philippine Conventional Energy Contracting Program (PCECP).
PCECP is DOE’s revised petroleum service contract awarding mechanism that allows the government to develop and utilize indigenous petroleum resources with qualified local and international exploration companies.
To date, 17 requests for the issuance of area clearance for various areas in the Sulu Sea, Recto Bank, Palawan, Quezon, Albay and Mindoro were received by the DOE from nine local and foreign companies.
Of those, three companies have acquired area clearances and submitted their respective letters of intent to formalize their area nominations for possible oil and gas reserves, subject to the approval of the DOE.
Meanwhile, six companies have viewed and four companies have purchased technical data sets that include seismic lines and well listings, while 16 companies have conducted courtesy visits to the DOE for one-on-one meetings regarding the PCECP.
The agency said at present, there are 22 active petroleum service contracts in the Philippines.