MANILA, Philippines–Amid expectations that oil exploration firms will seek extensions on Philippine projects as low oil prices dampen investor interest, the Department of Energy said it would consider such requests if such a move would enable the state to maximize assets later.
With no production cuts from oil exporting countries to defend prices amid a supply glut in the United States (the world’s biggest fuel guzzler), crude prices have plunged to below $70 a barrel from over $100 at the start of 2014.
There are fears prices may drop to as low as $40 a barrel and languish there over the next two years or so—something consumers would welcome but cash-strapped exporters cringe at.
There are oil and gas exploration projects under way, and there are those that could be launched next year when the DOE auctions off new areas. Will existing and prospective investors get cold feet? DOE hopes not, but says it is open to giving investors more time to regain their bearings.
“We are open to discussions for as long as these are beneficial to the country and the investors as well,” Energy Secretary Carlos Jericho L. Petilla said in a text message.
However, Petilla also said he hoped investors would take the long-term view that if they start drill works or bid for new areas now, oil prices may have recovered by the time they are ready to produce.
Still, Petilla said he was monitoring investor sentiment.
So far, he said, he is not aware of any investor formally seeking fresh extensions on existing service contracts or seeking more time for due diligence as part of the bidding round for new exploration deals.
On oil exploration areas for auction, so far, six foreign firms have bought data packs on sites under the Philippine Energy Contracting Round 5 (PECR 5). He said this indicated interest in the bidding set for late May to early June 2015.
“The data vendor is asking for an extension but we will put weight to investors’ request if ever there is,” Petilla said.
A reliable source said later in a chance interview that besides US-based Chevron Corp., ConocoPhillips Co. and ExxonMobil, other firms that secured data on oil sites under PECR 5 were Repsol S.A. of Spain, TOTAL S.A. of France, and Mitra Energy Limited of Malaysia. The data vendor is Zebra Data of Australia.