DoE chooses UK company for Mindoro, Palawan exploration

BY ALEXIS DOUGLAS B. ROMERO, Reporter/BusinessWorld The Department of Energy (DOE) has selected the proposal of United Kingdom-based Pitkin Petroleum Ltd. and listed holding firm South China Resources, Inc. to conduct exploration activities in Cuyo, Mindoro, and East Palawan regions. In a disclosure to the Philippine Stock Exchange on Friday, South China Corporate Information Officer David R. Balalad said the department informed them of the development last Thursday. The proposal for a petroleum service contract involves Area 4 of the 3rd Philippine Energy Contracting Round. The oil and gas block covers an area of 1.164 million hectares. In a letter to Pitkin dated Aug. 22, DoE Undersecretary Guillermo R. Balce said the DoE negotiating panel is set to schedule the negotiations to work out a mutually acceptable service contract. "We hope this will be the start of a fruitful campaign in Area 4," he said. In a phone interview, Mr. Balce clarified that the negotiation does not necessarily mean that the company will be awarded the exploration contract. But he said the Pitkin-South China partnership has huge chances of bagging the deal. "We have yet to award the contract. It is still subject to negotiations. We can say that they won the contract once we sign it," he said. Mr. Balce said the contract was based on a scoring system which took into account factors like the proposals’ work progress, financial program, and technical capabilities, among others. "Definitely, we chose the one that will have more advantages to the government," he said. Two proposals were submitted for the exploration of Area 4 but the DoE did not disclose which company had submitted the other proposal. The Energy official said once the negotiations are done, the contract may be signed within two months. Once the Pitkin-South China partnership wins the contract, it will be allowed to do seismic exploration and drilling in Area 4. In a separate phone interview, Pitkin country manager Christopher T. Jackson said the start of the negotation and exploration activities will depend on the DoE. He said he could not specify details of the contract as this was done in their headquarters in the United States. "I cannot comment on whether we will be awarded the contract. But based on the letter, the DoE said that we are the leading candidate," he said. Last May, around 30 companies tendered bids for a total of 23 exploration blocks auctioned under the third Philippine Energy Contracting Round. The department auctioned off nine oil and gas, three geothermal, and 11 coal blocks. Mr. Balce had earlier said the oil and gas blocks may yield $360 million or around P16.6 billion in investments, the geothermal blocks around P60 million, and the coal blocks P110 million. The nine oil and gas exploration blocks cover 7,263,900 hectares in shallow to deep waters within the prospective basins of East Palawan, Mindoro-Cuyo, Cagayan, Central Luzon, Visayas and Agusan-Davao. On the other hand, the geothermal blocks are located in Amacan in Compostela Valley, Biliran, Samar and Mabini, Batangas. The coal areas offered include blocks located in Quezon, Negros Occidental, Cebu, Surigao del Norte, Surigao del Sur, Agusan del Sur, Davao Oriental and Zamboanga. The government launched the energy contracting round in 2003 to allow private investors to develop the country’s energy resources. It is also in line with the DOE’s aim to reduce the country’s dependence on imported oil by tapping indigenous sources of energy.