The Department of Energy plans to conduct a study that will look into the safety of developing the Camago-Malampaya Oil Leg (CMOL) off Palawan before it can bid out the exploration and development of the project to prospective investors.
The development of the CMOL could yield 45 million barrels of recoverable oil, while oil-in-place estimates stood at about 150 million barrels, according to Energy Undersecretary Ramon Allan V. Oca.
On the sidelines of the Upstream Energy 2012 conference yesterday, Oca clarified that the proposed bidding was not “necessary on hold” nor was it abandoned as there was a need to first ensure that the development of the Camago-Malampaya oil leg would not hamper the operations of the Malampaya field.
Malampaya supplies natural gas to three Batangas-based power plants that generate 2,700 megawatts for the Luzon grid, or 40 percent of the electricity requirements on the island.
“We are always trying to take a look at how we can develop that [area], but we have to ensure the safety of the [Malampaya] gas operations because [the CMOL project] stands in the middle of the gas operations. Safety considerations for the gas operations are of utmost importance,” Oca stressed.
However, he added that actions that would be undertaken on the CMOL would have to be consulted first with Energy Secretary Carlos Jericho L. Petilla, who only assumed office late last month. The project, along with the other programs of the energy department, will have to be reviewed by the new energy chief.
It was reported earlier this year that the Department of Energy wanted to tap the consortium operating the Malampaya gas field, led by operator Shell Philippines Exploration BV, to study whether or not the CMOL was still a viable prospect.
CMOL, which is located within the Malampaya gas field, is covered by Service Contract 38.
Shell Philippines Exploration and Chevron Malampaya LLC of the SC 38 consortium earlier gave up their right over the Camago-Malampaya oil leg to enable them to concentrate on operating the gas fields.
The government originally awarded the contract to develop the CMOL to state-run Philippine National Oil Co., which then assigned these rights to its the upstream oil and coal arm, PNOC Exploration Corp.
PNOC EC then signed an agreement with Burgundy Global Exploration Corp., which became the operator of the oil rim with an 84.9-percent interest. The remaining 15.1 percent was held by PNOC EC.
It was earlier reported by the DOE and PNOC EC that Burgundy was supposed to drill an exploration well within the CMOL area either within the last quarter of 2009 or within the first quarter of 2010. But none of these materialized, which led to the termination of the contract between PNOC EC and Burgundy.