The Petroleum Association of the Philippines (PAP) yesterday called for the retention of incentives for their sector, saying this was needed especially in light of the looming depletion of the Malampaya natural gas field.
PAP chair Rufino Bomasang said major exploration companies had all adopted a wait-and-see position and nobody was actively looking for indigenous oil or the “next Malampaya” because of “the apparent instability of government policies.”
Bomasang was one of the speakers at an economic forum organized by the British Chamber of Commerce of the Philippines held in Makati City.
Bomasang noted that Malampaya gas was expected to be depleted in a few years—by 2024 or earlier according to energy officials—and that it was high time to be looking for the next source of indigenous natural gas.
“Considering the importance and urgency of finding indigenous petroleum and given the current lack of active exploration activities due to apparent policy instability, this is certainly not the time to remove the incentives for the upstream petroleum industry,” he said.
Bomasang was referring to moves in Malacañang and in Congress to repeal Presidential Decree No. 87 through the second package of the Duterte administration’s tax reform program.
Issued in 1972, PD 87 introduced the service contract system in the Philippine petroleum industry. The main feature is the production sharing system that was adopted by many countries wanting to assert ownership and control of their oil and gas resources.
The PAP chair said commercial oil and gas discoveries happened only after the promulgation of PD 87 in 1972 “with its stringent requirements and financial incentives.”
Before that, for over 80 years, there were only hit-and-miss exploration of the country’s petroleum resources, which failed to find any deposit in commercial quantity.
“This is a very high-risk industry which is different from all others, but of vital and strategic importance to national energy security,” Bomasang said. “It definitely needs these incentives more than ever before.”