Philippine Daily Inquirer: Drilling of 51 oil, gas wells expected in next 10 years

Drilling of 51 oil, gas wells expected in next 10 years
Posted: 1:47 AM | Jan. 08, 2005
Abigail L. Ho
Inquirer News Service

WITH investor interest in exploration and development of petroleum resources expected to increase, the government expects 51 new oil and gas wells to be drilled in the next 10 years.

According to the Department of Energy's updated Philippine Energy Plan for 2005 to 2014, these drilling projects will need P27.3 billion in investment: P24.9 billion for offshore drillings and P2.4 billion for onshore drillings.

A further P6.9 billion will be needed for gathering of two- and three-dimensional seismic data on identified sites, the plan says.

A recent Supreme Court decision affirming the constitutionality of foreign ownership of mining projects resulted in renewed interest in oil and gas exploration.

The Department of Energy recently awarded exploration contracts that had been in limbo since early 2004, when the Supreme Court -- before its recent reversal of decision -- declared that purely foreign entities could not go into mining in the Philippines.

These contracts were awarded to Japan Petroleum Exploration Co. Ltd. for oil and gas exploration activities in the Tanon Strait in Negros Occidental province and to Hong Kong-listed South Sea Petroleum Holdings Ltd. in the Agusan-Davao Basin in Davao province.

The government expects to award around six more contracts in the coming months.

Energy Secretary Vincent Perez earlier said that Malacañang was likely to approve soon an exploration contract that the energy department was currently negotiating with a consortium led by Australian natural gas firm BHP Billiton Petroleum.

BHP Billiton and consortium members Unocal Corp., Amerada Hess, and Sandakan Oil have applied for contracts to explore two blocks spanning 8,000 kilometers in the deepwater part of the southern Sulu Sea. Negotiations were prolonged because of the Supreme Court decision in early 2004.

Under its proposed work program, BHP Billiton will initially invest $1.65 million in geophysical studies on the two blocks and $32 million for drilling four wells.

The government will be holding a second round of petroleum contracting in August, following the success of the first auction in 2003.

Apart from the new drillings, the oil and gas sector will need P453.1 billion in new investments over the next 10 years, according to the Philippine Energy Plan.

This amount will cover development work and production of oil, gas, and condensate.

The oil and gas sector, including the new drillings and other development activities, will require a total of P487.2 billion from 2005 to 2014, the energy plan says.

With INQ7.net

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Prudent Investor Says: Given the government's thrust to develop the oil and energy sector, aside from the mining industry, you may expect market activities to focus on issues related to these. The underlying macro fundamentals merits for the development of the said sectors. The mining and oil industry, in my opinion, will be the market leaders for 2005.