Galoc oilfield startup delayed again

ABS-CBN News

Posted at Jun 23 2008 12:54 PM | Updated as of Jun 23 2008 08:54 PM

Reuters

SINGAPORE - First oil from the Philippines' Galoc oilfield is expected in early July as Typhoon Fengshen has brought commissioning work to an halt, adding to a series of delays, equity holder Otto Energy said on Monday.

The Floating Production Storage and Offloading System (FPSO) that is to extract 17,500 barrels per day from the ofshore field was disconnected on Friday ahead of the typhoon's passage, Otto Energy told the Australian Stock Exchange.

Reconnection is unlikely before June 27, which will further delay the field's startup until July, the company said.

"Although there is only minor commissioning work left to be done before production commences, it cannot be completed until the typhoon has passed and the FPSO is reconnected," the statement said.

"[...] First oil is now expected to commence in early July."

The announcement comes almost two weeks after Philippines Energy Secretary Angelo Reyes told reporters first oil was expected on June 16.

It is also the latest in a series of delays that have seen the field's startup repeatedly postponed from initial plans for a first quarter startup.

Typhoon Fengshen, with maximum gusts of 195 kph, has killed at least 155 people in central and southern Philippines over the weekend, and more than 800 people remained missing after a passenger ferry capsized.

The typhoon is currently over the South China Sea and is expected to lurch northwards towards Taiwan in the next few days, according to storm tracker website www.tropicalstormrisk.com. Otto Energy said the forecast track for the typhoon continued to be revised westwards and it was expected to pass within 150 km of the Galoc oilfield.

Galoc startup keenly awaited

The Galoc field has great significance, not only for the Philippines, whose meagre 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 that have bet on the underexplored Philippines.

Galoc will be Otto Energy's first oilfield to come onstream.

Otto shares fell to A$0.435 by 0412 GMT, down 1.14 percent, and off the record high of A$0.525 touched last month.

Nido shares fell 3.33 percent to A$0.435, off a high of A$0.64 also hit last month.

Both companies underperformed the wider Australian market on Monday, which was down 0.54 percent by 0412 GMT.

Otto Energy holds an 18.3 percent indirect interest in the field via a 31.38 stake in operator Galoc Production Company (GPC), 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 is split between Nido Petroleum, with a 22.28 percent share, and several Philippine partners.

Vitol, and European trader Trafigura, will be the two main marketers of the light sweet crude.

Reyes told reporters this month that domestic refineries would be given priority to buy the light sour crude.

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.

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 ends.