The Philippines, which is trying to cut dependence on imported oil, said on Tuesday that its 17,500 barrel-per-day (bdp) Galoc oilfield will come on stream next week with output aimed at local refineries.
"We are pleased to announce that the development of Galoc oil field is completed and that the first flow of oil is estimated to be commencing June 16, 2008," Energy Secretary Angelo Reyes told reporters.
The Philippines' newest oil field holds deep significance, not only for the Philippines whose meager output it will hike by some 70 percent to slightly more than 40,000 bpd, but also for Otto Energy and Nido Petroleum, two small independent Australian companies.
Otto Energy acquired a 31.38 percent stake in Galoc Production Co (GPC) last December, with European trader Vitol holding the remaining 68.62 percent.
GPC operates the Galoc field with a 58.29 percent interest. The remaining 41.71 percent are split between Nido Petroleum with a 22.28 percent share and several Philippine partners.
Galoc comes as a relief for the Philippines, which is trying to cut its annual import bill of $6 billion and is reeling from soaring fuel and food costs which have pushed annual domestic inflation to record highs.
Galoc will also be Otto's Energy's first oilfield to come on stream.
"The Philippines will earn from the sales of crude oil which will be benchmarked at international prices and with domestic refineries being given the first priority," Reyes said. "Rather than be exported, it will be consumed locally."
Reyes said this would translate to $1.4 billion in foreign exchange savings for the country from the start of commercial production until the life of the well expires.
Galoc is said to contain 10 million to 20 million barrels of oil reserves, Reyes said.
"It must be mentioned that the oil we have in Galoc field is high-quality oil, it is light, non-waxy and it is medium content in sulfur," Reyes said. "It is premium oil and could be refined in local refineries here."
The new crude will provide the first major crude oil addition to the Asia-Pacific region.
(Corrects story after spokesmen for Reyes clarified the oil field would come on stream on June 16 instead of July 16)