Northwest Palawan oil extraction by 2026–PNOC-EC
y Lenie Lectura – October 21, 2020
from Business Mirror
Energy Secretary Briguez: “By fourth quarter next year, we can start drilling. If we will be lucky, by 2026 or early 2027, production will start for SC 57.”
Energy Secretary THE government expects to extract petroleum reserves within the northwest Palawan basin as early as 2026, a year before the Malampaya gas field runs dry.
During the Senate budget hearing, Philippine National Oil Co.-Exploration Corp. (PNOC-EC) President Rozzano D. Briguez said drilling activities for Service Contract (SC) 57 would commence next year, with production date targeted in 2026.
“By fourth quarter next year, we can start drilling. If we will be lucky, by 2026 or early 2027, production will start for SC 57,” he said.
SC 57, which was awarded to PNOC-EC in September 2015, covers a total area of 7,200 kilometers in offshore Northwest Palawan and is situated around 50 km northwest of the northwesternmost tip of Busuanga Island.
Briguez said the government would take in a partner by way of assigning a portion of the contract to another party for development. “Yes, we are inviting others to join,” he said.
A farm-in agreement must be finalized prior to the drilling activities. Briguez said potential petroleum reserves in the area are “estimated at two-thirds of Malampaya.”
The Malampaya gas field has proven reserves of about 2.7 trillion cubic feet of natural gas reserves and 85 million barrels of condensate.
“With the new EO (Executive Order) 80, we will be farming out 70 percent. So, we will be earning. Our ownership is 100 percent. If we farm out the 70 percent, we will retain the 30 percent,” the PNOC officials explained to the senators.
CNOOC?
He did not say if China National Offshore Oil Corp. (CNOOC), which earlier farmed-in into SC 57, would secure the 70-percent interest.
It may be recalled that in April 2006, CNOOC acquired 51-percent participating interest and operatorship in SC 57, while Mitra Energy farmed-in last March 2006, getting 21 percent. The Deed of Assignment to formalize their entry has yet to be approved, following the issuance of an EO during the Arroyo administration that prohibits the PNOC from awarding farm-in and farm-out agreements for oil exploration, development, and production.
However, this EO was repealed with the issuance of another EO last year by President Duterte. EO 80 paves the way for PNOC-EC to partner with another firm to implement SC 57.
Also, with the recent lifting of the moratorium on oil and gas exploration activities in the West Philippine Sea, CNOOC’s partnership with PNOC-EC for SC 57 can already advance.
Aside from SC 57, other contracts that were affected by the moratorium include SC 59, 72 and 75.
Coal blocks
Meanwhile, PNOC-EC is applying for coal blocks in Malangas, Zamboanga Sibugay. Its application is subject to a counteroffer, the Department of Energy (DOE) said.
PNOC-EC said in July that it would prioritize projects that are expected to yield profits. These projects include petroleum exploration and coal power.
PNOC-EC holds four coal operating contracts (COC): COC 41 (Malangas), COC 122 (Isabela), COC 185 (Buug-Malangas) and COC 186 (Imelda-Malangas). It also trades coal through its coal terminal located in Malangas, Zamboanga Sibugay.
The company, chaired by Energy Secretary Alfonso Cusi, is also engaged in the following petroleum service contracts: SC 37 (Cagayan), SC 57 (Calamian), SC 58 (West Calamian), SC 59 (West Balabac), SC 63 (East Sabina), SC 74 (Northwest Palawan) and SC 75 (Northwest Palawan).
More important, PNOC-EC has a 10-percent stake in the Malampaya deep water-gas-to-power project under SC 38.
“PNOC-EC will prioritize projects with higher projected revenue or fastest ROI (return on investment),” Briguez had said.
