I chanced upon this article at the KPMG corner which touched on the topic of Oil Exploration in the Philippines, the author, Fernando Hernandez , pointed out that the Philippines potential for oil has not been really investigated, despite the fact that we have sedimentary basins located near oil rich territories of Indonesia, Malaysia and China. These can be found in 16 sedimentary basins covering an area of 700,000 sq km.
Since the start of oil exploration in the Philippines about a decade ago, 557 wells have been drilled with only 17 wells ever having commercially produced oil. Of those 17, only 4 wells are still pumping oil. Compare this to our neighbor, Indonesia, who drills about 400 wells a year. The Philippines drilling rate can be pegged at 1.6 wells per 1,000 square kilometers, compare this to the United States which drills about 1 well per 25 square kilometers.
Indonesia was once a member of OPEC, but since they stopped exporting oil already and use it only for local consumption, they decided to backout of the consortium. The last major discovery for the Philippines was in 1992 at Malampaya.
The author also pointed out that the country can benefit from the UNCLOS (United Nations Convention on the Law of the Sea). which could increase the areas that the Philippines can claim as its own for exploration by a factor of twenty.
The Philippines has a claim of an additional 200 miles from its outermost islands based on the geology of its continental shelf. The Philippines could now have the largest unexplored oil territory than it has ever known.
Touching on the topic of brass taxes.
The government’s share from Service Contracts 14 and six was $81 million and $42 million respectively, while the private sector investors received $54 million and $18 million. Clearly, there is money to be made once commercial quantities are found.
The Philippines has always been known as an oil importing country. The Philippines Oil Consumption is about 353,000 barrels/day. Galoc oil field off the coast of Palawan has only recently started to pump oil. It currently produces about 20,000 barrels per day or roughly 6% of the Philippines daily oil consumption. The Department of Energy is currently shopping out permits to oil exploration companies to check whether these wells does indeed posses the potential to extract oil from.
Status of some Oil Exploration Projects:
- Galoc Oil Field - currently pumping out oil and is said to contain about 9 million barrels of oil.
- Reed Bank- completed survey by Forum Energy Philippines Corp, but drilling cannot commence because of China and Vietnam’s claim over the area. More specifically because of China’s diplomatic objection to exploration conducted by the Philippines. Reed bank is said to have about 3.4 trillion cubic feet of natural gas and 440 million barrels of oil.
- Marantao - exploration to be jointly conducted by Trans Oil and EDC. Drilling to commence by 2010 if survey comes out ok. Marantao is estimated to have about 1,812 billion cubic feet of gas and 567 million barrels of oil
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Category: Oil, Oil Price
