MANILA, Philippines -- The government on Tuesday said that the Galoc oil field in offshore northwest Palawan will come on stream next week with output aimed at local refineries.
"We are pleased to announce that the development of Galoc oil field is completed and that the first flow of oil is estimated to be commencing June 16, 2008," Energy Secretary Angelo Reyes told reporters.
Reyes also said that Exxon Mobil, a major oil and gas explorer and developer, has expressed interest in exploring oil and gas in the country.
Reyes said Exxon officials will make a courtesy call to President Gloria Macapagal-Arroyo within the week.
The development by Galoc Production Co (GPC), the first in the Philippines since 1992, is expected to produce 17,000 to 20,000 barrels of oil per day, accounting for almost 10 percent of local demand.
Reyes said Galoc oil sold directly to local refineries could bring down pump prices as this would have lower freight, handling and insurance costs. But he could not give estimates as to how much Galoc oil prices would be lower.
GPC would invest $120 million in energy infrastructure and undertake additional exploration work to confirm additional oil reserves, Reyes said.
"The oil found is high quality oil, non-waxy and medium content in sulfur, it's premium oil and could be refined in local refineries here," he said.
On Exxon's entry into oil exploration in the country, Reyes said this showed that "the probability of large quality oil in the Philippines is extremely high."
He said the exploration work would be at service contract 56 in Sulu Sea, which is held by Mitra (Energy Limited), a Malaysian-based company. "Exxon will be 50 percent owner and will be the operator."
The Galoc oil field will hike by some 70 percent to slightly more than 40,000 bpd the Philippine?s meager oil output.
Australia-based Otto Energy acquired a 31.38 percent stake in GPC last December, with European trader Vitol holding the remaining 68.62 percent.
GPC operates the Galoc field with a 58.29 percent interest. The remaining 41.71 percent are split between Nido Petroleum, an Australian firm, with a 22.28 percent share and several Philippine partners.
Galoc comes as a relief for the Philippines, which is trying to cut its annual import bill of $6 billion and is reeling from soaring fuel and food costs which have pushed annual domestic inflation to record highs.
Galoc will also be Otto's Energy's first oilfield to come on stream.
"The Philippines will earn from the sales of crude oil which will be benchmarked at international prices and with domestic refineries being given the first priority," Reyes said. "Rather than be exported, it will be consumed locally."
Reyes said this would translate to $1.4 billion in foreign exchange savings for the country from the start of commercial production until the life of the well expires.
Galoc is said to contain 10 million to 20 million barrels of oil reserves, Reyes said.
The new crude will provide the first major crude oil addition to the Asia-Pacific region.