Gov’t offers new coal, oil exploration areas to investors

The Department of Energy (DOE) has put out a bigger offering of new petroleum and coal exploration areas, including five blocks in the West Philippine Sea, requiring at least P7.38 billion in expenditures from investors.

The auction is expected to generate at least P7.23 billion in petroleum exploration investments and P150 million in coal exploration spending, Energy Undersecretary Ramon Allan V. Oca said at the official launch of the Philippine Energy Contracting Round (PECR-5) in Makati City.

“For petroleum we have a size of around 4.8 million hectares for the 11 areas and for coal we have around 87,000 hectares consisting of 87 coal blocks for the 15 areas,” said Rino E. Abad, DOE-Energy Resource Development Bureau director. Under PECR-4 in 2011, the DOE offered 100,000 hectares.

The PECR-5 offers 11 areas for petroleum exploration mostly in Luzon. These are Area 1 in offshore Southeast Luzon; Areas 2 & 3 in the Masbate-Iloilo area; Areas 4 & 5 in Northeast Palawan; Area 6 in Southeast Palawan; Area 7 in West Palawan; and Areas 8, 9, 10, & 11 in West Luzon. Of these, Areas 7, 8, 9, 10 and 11 are in the West Philippine Sea. The 15 prospective areas for coal are in Agusan del Sur, Surigao del Sur, Zamboanga del Norte, Zamboanga Sibugay, and Sarangani provinces.

Asked whether potential investors in oil exploration could encounter problems given the territorial issues in the West Philippine Sea, Energy Secretary Carlos Jericho L. Petilla said the five petroleum contract areas were within the Philippine Economic Zone and were very close to Luzon. If other countries like China would protest, Petilla said the matter would likely be referred to the United Nations for resolution.

Forum Energy Plc., a subsidiary of listed firm Philex Petroleum Corp., had been having difficulty progressing with a drilling program for Service Contract 72 (SC 72) at the Recto Bank area in the West Philippine Sea. This week, DOE officials said Forum Energy expressed interest in restarting drilling work in the area as it resumed commercial talks with China’s biggest offshore oil and gas producer, China National Offshore Oil Co. Ltd. (CNOOC).

There were three potential areas for petroleum exploration in the Bangsamoro area, but the national government excluded those temporarily and promised to put the areas back in concurrence with the Bangsamoro government once it has been formed, Petilla said.

The deadline for submission of bids for coal under PECR5 is on Sept. 19. For petroleum exploration areas, the deadline is on Feb. 27, 2015. DOE aims to award the coal contracts by end-2014 and the petroleum contracts around the first half of 2015, officials said.