Philippines: DOE modifies 'petroleum contracting' scheme

Philippines: DOE modifies 'petroleum contracting' scheme

For prospective commercial discoveries, the Department of Energy (DOE) will
be modifying the "upstream contracting round" for petroleum blocks at
Philippine basins that could potentially yield fresh finds of indigenous oil
and gas.

According to Energy Secretary Alfonso G. Cusi, under the country's sixth
petroleum contracting round, the program shall likewise be renamed
Philippine Conventional Energy Contracting, and shall serve as replacement
to the long-running Philippine Energy Contracting Round (PECR).

Essentially, the strategy will shift in a way that the prospective
developers would already have the upper hand as to the target areas they
will be setting their investment sights on.

"Any proponent could come up with a proposal that they want to explore a
particular area. Then they will have to offer that to the DOE, but we will
still have to publish it and offer it via competitive selection," Cusi
explained.

He emphasized that with this change in contracting methodology, the "waiting
time" for the award of petroleum blocks could be lessened - compared to the
era of the PECR wherein the DOE sets its own timeframe when it will
undertake auctions for petroleum block offers.

To a certain extent, it will be some sort of "reversal of role" because the
investor could now take that pace and risk assessment on its side. It still
remains to be proven though if the contracting name change and track would
also reverse the country's destiny on dearth of commercial hydrocarbon
discoveries.

"Before, investors would need to wait for DOE to make announcement that we
will open this area for exploration. Now, any proponent can already come up
with a study and submit it to the DOE," Cusi said.

In turn, that could be the Department's anchor also in undertaking bidding
rounds on specific areas that could then be the pivot for seismic survey,
exploration and prospectively commercial development.

While hammering out the specific processes of this revised contracting
course, Cusi indicated that the government would now be ready to award the
service areas for petroleum exploration won by relevant parties under
PECR-5, so far 'the last of the Mohicans' under that petroleum contracting
scheme.

It was the contractor's tax issue on the royalty sharing arrangement that
had impeded the process, he reiterated to media, but such has already been
resolved paving the way for the signing of the contracts by President
Rodrigo Duterte and these are now due for award to the winning investors.

After Malampaya for gas and Galoc for oil, the Philippines is lacking in new
petroleum discoveries that could have pushed its energy independence to a
higher degree.

The energy department has attempted offering new blocks for exploration and
discovery, but these have been either hobbled by relentlessly challenged
government policies, diplomatic strife in the West Philippine Sea, or
reserve scarcity.

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Link to Original Article:
http://business.mb.com.ph/2017/08/20/doe-modifies-petroleum-contracting-sche
me/

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com