BHP Billiton wants out of Cinco drilling

MANILA, Philippines—BHP Billiton Petroleum (Philippines) Corp., the operator of Service Contract 55 off Palawan, is withdrawing from the drilling of the Cinco-1 prospect and the SC55 license, according to joint-venture partner, Otto Energy Ltd.

Otto Energy said in a report that it had been verbally advised by BHP Billiton that the SC55 operator “has decided not to participate” in the project. Otto Energy said it was taking legal advice on BHP Billiton’s continuing obligations to fund Otto’s working interest through the current sub-phase.

“Otto Energy will strenuously enforce its full legal rights under the relevant agreements and seek to protect the interest of Otto Energy and its shareholders in relation to Otto Energy’s interest in SC55,” the company said.

BHP Billiton controls 60 percent of the SC, while Otto Energy and local partner Trans-Asia Oil and Energy Development Corp. own the remaining 33.18 percent and 6.82 percent of the oil block, respectively.

The Department of Energy (DOE) has not yet issued a notice following the recent approach by BHPB to the DOE regarding the revised timing of the work program commitments outlined by Otto.

Earlier, Otto Energy said the SC55 joint venture had received clearance from the Palawan Council for Sustainable Development (PCSD) on the drilling of the deepwater exploration well within the Cinco prospect off Palawan.

Joint venture partner Otto Energy said that BHP Billiton had received a formal Strategic Environmental Plan clearance (SEP clearance) from the PCSD to drill the Cinco-1 prospect in the service contract area.

BHP Billiton and its joint venture partners earlier sought a new deadline for the drill work to 2014 from this year, with “force majeure” as grounds. This stemmed from the delay in receiving the SEP Clearance.

SC 55’s Cinco prospect is estimated to contain mean gas resources of 3.2 trillion cubic feet (tcf) along with 75 million barrels of condensate.