Forum Energy given Palawan oil service contract

BusinessWorld

Posted at Feb 18 2010 12:59 AM | Updated as of Feb 18 2010 11:48 PM

MANILA, Philippines - London-based oil and gas company Forum Energy Plc. finally received clearance to start drilling in South China Sea following the conversion by the Department of Energy of the firm’s geophysical survey exploration contract (GSEC) into a full service contract.

“We are pleased to have finally secured the Service Contract over the GSEC 101 area in what is a company-changing development for Forum Energy,” Walter W. Brown, Forum Energy chief executive officer, said in a statement.

The service contract, which will eventually lead to commercial operations in the field, was awarded to Forum Limited, a unit of Forum Energy. “Full details relating to the contract work program will be announced shortly,” the firm said.

“We intend to push forward with the appraisal of this gas field to commerciality,” Mr. Brown said.

The exploration block, where Forum Energy holds a 70% interest, is located off Western Palawan in the South China Sea.

The area covers the Sampaguita oil and gas discovery in the Reed Bank Basin, which the Chinese government claims is part of the contested Spratly Islands.

The block lies 250 kilometers southwest of the Malampaya field, the largest natural gas field in the country which powers three plants.

“Given the potential size of the resource and proximity to the Asian markets, we believe this project is an ideal candidate for an LNG (liquefied natural gas) facility,” Mr. Brown said.

Forum Energy earlier said it had already invested over $5 million on exploration activities in the area. The firm said the project will enable it to engage in gas exports.

Seismic mapping done by Forum Energy confirmed minimum gas reserves of up to 3.4 trillion cubic feet and a potential of up to 20 trillion cubic feet.

The Malampaya gas field, in comparison, has confirmed reserves of 2.6 trillion cubic feet.

GSEC 101’s conversion into a service contract was delayed as the area is covered by the tripartite deal of Philippines, Vietnam and China in 2005 for a three-year joint marine study in the South China Sea, which includes the disputed Spratly Islands.

The agreement was signed by Philippine National Oil Co., China National Offshore Oil Corp., and Vietnam Oil and Gas Corp.

The deal involved joint marine seismic research without drilling activities.

Forum Energy’s other oil and gas assets in the Philippines include a 66.7% interest in Service Contract 40, a service contract in Cebu which contains the onshore Libertad Gas Field and Maya discovery, and a 2.28% stake at the Galoc oil field.

Forum Energy was established in April 2005 through the consolidation of the assets of FEC Resources, Inc. of Canada and Sterling Energy Plc of the UK into one corporate entity.