DOE extends PXP Energy’s petrol service contracts

By Myrna M. Velasco – October 18, 2022, 3:59 PM
from Manila Bulletin

Following the government’s affirmation of its “force majeure declaration”, the Department of Energy (DOE) said the Pangilinan-led PXP Energy Corporation will be accorded extension on pursuing its work program on two petroleum service contracts (SCs) covering its prospects that are straddling Palawan basin.

In a letter to PXP Energy President Daniel P. Carlos, Energy Secretary Raphael P.M. Lotilla primarily acknowledged the suspension of exploration activities at the company’s Service Contract 75 in Northwest Palawan basin, as well as Service Contract 72 at the Recto Bank being the major ground on its bid for “force majeure declaration” in April this year.

Hence, the energy chief stated in his correspondence to Carlos that PXP Energy will be “entitled to an extension of the exploration period corresponding to the number of days that the contractors actually spent in preparation for the activities that were suspended by the suspension order issued by the DOE on April 6, 2022.”

Lotilla added “the suspension has nullified all the work done since the lifting of force majeure on October 14, 2020” referring to the timeframe when the Philippine government had already allowed resumption of seismic and exploration activities in the disputed territories of the West Philippine Sea.

The upstream energy company officially filed its application for ‘force majeure’ stature in April for both its Service Contracts 72 and 75, but it was only on October 11 this year that it has secured the DOE approval.

The DOE similarly affirmed that the total expenses for SC 75 reached $5,183,859.00; stating further that those were “incurred as a result of the DOE directive to suspend SC 75 activities.”

The energy department emphasized that the estimated scale of expenses “will be part of the approved recoverable costs” – although, that would still be subject to eventual audit of the agency.

Additionally, the DOE validated that total costs spent for SC 72 stood at $8,603,389.00 – and these also accrued as a result of the suspended exploration activities at the block, hence, these will likewise be part of the recoverable costs that PXP Energy could claim when it resumes work program.

PXP Energy had contended that it was “constrained to terminate agreements with suppliers and incurred substantial liabilities costs and penalties” because of the very hasty government order in April that consequently stalled its exploration and drilling program.

To recall, it was Malacanang which announced at the time the suspension of PXP Energy’s exploration activities; qualifying further that the company can already resume work program at the two petroleum blocks once it secures clearance from the Security, Justice and Peace Coordinating Council (SJPCC), a government body that has been overseeing political, diplomatic and national security concerns.

On the required state go-signal, PXP Energy constantly sounded off that it will “continue to coordinate with the government on the resumption of activities in both service contracts 72 and 75.”