State oil exploration firm unsure if PH can start its first oil drilling by June 2022

Bruce Rodriguez, ABS-CBN News

Posted at Apr 30 2021 08:37 PM

MANILA — The Philippines may need more time before it can begin its first oil-drilling activities, even as President Rodrigo Duterte lifted the moratorium on oil exploration in the West Philippine Sea in October 2020.

PNOC Exploration Corporation (PNOC-EC), the upstream oil, gas and coal subsidiary of state-owned Philippine National Oil Company (PNOC), has admitted that it is still uncertain whether they can start drilling for oil by June 2022, when Duterte's term ends.

"If we look at time reference or the timeline between continuous study and exploration and drilling, it will take a minimum of 12 months," PNOC-EC President and CEO, (Ret.) Lt. Gen Rozzano D Briguez said in a virtual forum. 

"So if you look at the timeline right now, probably it's 50-50; it's really hard to do the drilling before June of next year," he explained.

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But for now, Briguez said that they are still ironing out details between a government technical working group and its private-sector partner about the potential drilling activities.

"We don't have the framework right now, because we still need the approval of something before we can move forward," he added. 

Earlier, Briguez told senators that the country could start drilling in an area near the Malampaya Natural Gas field this year, after the oil exploration moratorium was lifted

He also estimated that oil production could start by late 2026 or early 2027.

Briguez has said the government-owned and controlled corporation was focused on 2 service contracts namely: "SC 57" and "SC 59," which he said were located within the "disputed areas" and one in Northwest Palawan. 

"SC 57," estimated to be 1.8 trillion cubic feet, is seen to have a big potential since it is located near the Malampaya Gas Field which is the source of fuel for a fifth of the Philippines' total power generation.

The Malampaya gas field is seen to deplete by 2027, while the contract for the project with a private sector consortium is set to expire in 2024.

The fate of the project is still uncertain with Energy Undersecretary Felix William Fuentebella saying, "there are other tribunals deciding on almost the same questions. There's an arbitration case in Singapore and there's one in America. So these are the legal pressures that maybe they're also facing because some tribunals are already deciding on the matter."

But in the meantime, several local private sector groups have been eyeing to buy the 45 percent Malampaya stake from Shell Philippines, including Dennis Uy's Udenna Corporation, which already bought the 45 percent stake of Chevron.

Other groups that are eyeing Shell's rights include the group chaired by business tycoon, Manuel V. Pangilinan.

Lawmakers and other experts have warned that the country needs to find a suitable replacement for Malampaya or extend its life to avoid an energy crisis in the coming years.