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PIA Press Release
2005/08/22

$94M committed to develop indigenous energy resources

by DOE Investor Relations Office

Quezon City (22 August) -- About US$94 million in minimum financial resources has been committed for the development of the country's indigenous energy resources as the Department of Energy (DoE) recently signed six petroleum service contracts with foreign and local upstream petroleum companies.

"Continued interest from the private sector to explore and develop our indigenous energy resources is a welcome news in the midst of continuing volatility in world oil prices. We have to actively push for energy independence by developing our own resources to mitigate the adverse effects of soaring oil prices," Energy Secretary Raphael P.M. Lotilla said.

The six petroleum service contracts involve the development and exploration for oil and gas resources in West Palawan, Northwest Palawan, Mindoro-Cuyo basin, East Visayan Basin and Pita-San Jose, Northern Cagayan Valley and Sulu Sea.

"It is our hope that from these new service petroleum service contracts we will be able to discover large oil and gas fields of commercial quantity," Secretary Lotilla said.

The contracts cover a seven-year exploration period with the first two years of the work program devoted to conducting geological and geophysical studies and drilling of one exploration well.

The consortium of Australia's BHP Billiton Petroleum PTY Ltd., Amerada Hess Ltd., Unocal Sulu Ltd. and Sandakan Oil II, LLC was the latest to be awarded the contract for oil and gas exploration over offshore Sulu Sea.

The contract (Service Contract 56) area covers 8,620 hectares offshore Sulu Sea which is considered to be one of the most prospective areas for oil and gas exploration as indicated by the previous drilling activities conducted in the area.

The consortium committed some $43.85 million which includes the conduct of comprehensive geological and geophysical studies and the drilling of four exploration wells.

The consortium of Alcorn Gold Resources Corp., Trans-Asia Oil and Energy Development Corp. and PetroEnergy Resources Corp. was awarded the contract over the East Visayan basin (SC 51) covering 440,000 hectares. Several studies have been made in the area including the initial discovery of Villaba-1 gas field offshore Northwest Leyte.

The company is expected to invest some US$3.7 million to the project.

E.F. Durkee and Associates was awarded the contract over Piat-San Jose, Northern Cagayan Valley (SC 52) covering 96,000 hectares. The area is located within Cagayan basin which hosts the San Antonio Gas Field operated by the Philippine National Oil Co.- Exploration Corp (PNOC-EC). San Antonio Gas Field produces 1 million cubic feet of gas everyday which fuels a three megawatt power plant.

E.F. Durkee is investing some $5.2 million for the seven-year exploration project.

India's Laxmi Organic Industries Ltd. will explore for oil and gas resources in Mindoro-Cuyo basin. The contract (SC 53) covers 600,000 hectares. Laxmi Organic's investment in the country's upstream petroleum industry, committing some $5 million minimum financial investments, is part of the company's recent move to direct efforts in the exploration and energy business.

Laxmi is under the Goenka Group which is involved in the manufacture and trading of chemicals, pharmaceutical intermediates, paper, natural products and building materials.

Another company Nido Petroleum Phils. Ltd. was awarded service contract in Northwest Palawan (SC 54) covering 537,616 hectares.

The company is investing $24.4 million and plans to drill four exploration wells with an optional exploratory well for the seven year period. Nido Petroleum is also a member of the consortium involve in the production of the Matinloc and Nido fields in Northwest Palawan. Matinloc and Nido fields produced a total of 40,640 barrels of oil in the first quarter of the year.

The consortium of Ottoman Energy Ltd., Australasian Energy Ltd., and Trans-Asia Oil and Energy Development Corp. was also given the contract (SC 55) for exploration in the West Palawan. The area covers 900,000 hectares. The consortium, investing some $12.4 million, plans to drill ultra deepwater well during the first three years of the work program.

"We look forward to the commencement of activities for the development and exploration of these areas. We thank the companies for venturing in the country's petroleum reserves and help us attain our goal of energy independence by increasing the development of indigenous resources," Secretary Lotilla said.

For this year alone, the DoE has awarded 10 service petroleum contracts. The other four were contracts were given to a joint venture of Petronas Carigali and Philippine National Oil Co.-Exploration Corp. over offshore Mindoro; Aragorn Power Corp. in the Cagayan Basin; Phil-Mal Petroenergy Corp. in Southern Cebu and Ottoman Energy Ltd in Northwest Palawan basin.

Results of the recently-completed Philippine Petroleum Resource Assessment Project (PhilPRA) of the DoE and the Norwegian Agency for Development Cooperation (NORAD) show that the country's petroleum basins increased to 16 from the earlier 13 basins identified in the study funded by the World Bank in 1986.

The resource assessment makes the Philippines a promising site for petroleum exploration in the Asian region.

The 16 identified petroleum basins are located in Northwest Palawan, Southwest Palawan, Central Luzon, Visayan, Mindoro-Cuyo, Cagayan, East Palawan, Southeast Luzon, Reed Bank, Cotabato, Agusan-Davao, Sulu Sea, West Luzon, Ilocos, Bicol Shelf, and Iloilo-West Masbate.

The study shows that the total recoverable petroleum resources could reach to 8.9 billion barrels of fuel oil equivalent (MMBFOE) or about 3.6 billion barrels of oil, 28.5 trillion cubic feet of gas and another 165 million barrels of condensate. (DOE) [top]

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