BHP Billiton & 12 Oil Firms Start Drilling oil and gas in the Philippines

Philippines — Dubbing it as "the period of upturn in upstream petroleum investments" in the country, the Department of Energy (DoE) has announced that 10 to 12 wells have been committed by service contractor-firms in their drilling programs this year.

In a statement to the media, Energy Undersecretary Jay Layug disclosed that they have cornered "10-12 firm commitments to drill exploration wells and three workover wells from our service contractors."

This includes the following:

• Blade Petroleum for the Cadlao block in Northwest Palawan;
• Galoc Production Company (GPC) in Service Contract 14C, also in Northwest Palawan;
• Philippine National Oil Company-Exploration Corporation (PNOC-EC) in Cagayan basin;
• Gas2Grid in SC 44 and China International Mining Petroleum Company Limited (CIMP) at SC 49 in Visayas basin;
• Frigstad Energy at SC 50 in NW Palawan;
• Pitkin Petroleum at SC53 in Mindoro-Cuyo prospect; and
• BHP Billiton at its two blocks in Southwest Palawan.

Layug emphasized these drilling programs are part of the work commitments submitted by the service contractors to the energy department. "These are existing work programs under their respective service contracts," the energy official said.

Exploration wells are drilled to discover oil or gas and if these can be developed at commercial quantity; while workover wells may be pursued to improve flowrates, at proven finds or existing production fields.

Service contractors are required to submit a seven-year work program with the DOE; and that could entail drilling of several wells to determine if the oil or gas finds would merit declaration of commerciality.

While the department has not given exact figure on the investment costs, it was indicated that the rule of thumb for offshore deep well drilling could range from $80 million to $100 million; while those onshore may command an investment of $30 million to $50 million per well.

"We have seen an upturn in Philippine upstream petroleum industry this year as a result of current high-oil price market condition and the efforts of the DoE to revitalize the industry," Layug has noted.

For the oil and gas investors, the equilibrium price they have been hinging their investments on has been at $80 per barrel. Obviously though, current price trends have already surpassed that immensely.

Layug specified that the energy department's intent of re-igniting interests in upstream petroleum ventures is in line with the Aquino administration's thrust "to focus on resource development as a long-term plan of action in the hopes of finding indigenous oil and gas resources to reduce our dependence on imported petroleum and mitigate effects of oil price volatility."

The department will be offering 15 new petroleum service areas in biddings scheduled until July 2012.

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Philippines seeks another ASEAN support for possible China meet on Spratly row

Recently, the Philippines protested early year 2012 for another China's invasion to the Philippines territory in Sabina Shoal which is only a 82 Miles from the Philippines Main Island.

China rejected the protest of the Philippines and pronounced that they owned everything in the West Philippines Sea and voiced that it will call for another negotiation to settle Spratly.

The Philippines is committed and lead for the resolution of the Spratly and called anew for the support of the Association of Southeast Asian Nations (ASEAN) in having a meeting with China to resolve the territorial row involving the Spratly Islands.

Foreign Affairs Secretary Albert del Rosario made the call at the ASEAN Foreign Ministers' Meeting Retreat at Siem Reap, Cambodia, where he reiterated his stand for a rules-based solution to the problem.

"In the context of the Philippine position and the background on this issue, the Philippines reiterates its proposal that a meeting be held as soon as possible among the claimant states including China, under the guidance of ASEAN, to resolve the conflicting claims in the WPS (West Philippine Sea) based on the rules-based regime of (the United Nations Convention on the Law of the Sea). This proposal for constructive engagement should be acceptable to all," Del Rosario said.

He added the Philippines calls on all ASEAN Member States to endorse this proposed claimant states' meeting, which the Philippines is ready to host.

"We would also welcome other ASEAN Member States to host this meeting if they would like to unequivocally express their support for and advance a rules-based approach in the region," he said.

The text of his statement delivered last Jan. 11 was posted Sunday on the DFA website.

Aside from the Philippines and China, other claimants to the Spratlys include Taiwan, Brunei, Malaysia, and Vietnam. Of these, the Philippines, Brunei, Malaysia and Vietnam are members of ASEAN.

Only legitimate approach

Del Rosario maintained a rules-based approach is the only legitimate way in addressing disputes in the West Philippine Sea.

He said the dispute settlement mechanism established in the UNCLOS is the fundamental principle of the rules-based approach being espoused by the Philippines.

"I have emphasized this at the 44th ASEAN Ministerial Meeting (AMM) and 18th ASEAN Regional Forum (ARF) and again at the last ASEAN Foreign Ministers' Meeting, all held in Bali. This rules-based approach under UNCLOS also calls for the resolution of disputes through peaceful means. For this reason, the Philippines proposed to ASEAN the Zone of Peace, Freedom, Friendship, and Cooperation (ZoPFF/C) as the actionable framework to clarify and segregate the disputed land features from the non-disputed waters of the West Philippine Sea, and in the process, address the issue of the 9-dash line," he said.

He also said the Philippines has stated it is considering third party adjudication, arbitration or conciliation, as appropriate, in the context of the dispute settlement mechanism of UNCLOS.

On the other hand, he said the Philippines also proposed during the November AMM a meeting of claimant states in the West Philippine Sea to specifically include China, to resolve these claims and define the non-disputed and the disputed areas for the purpose of establishing a Joint Cooperation Area.

The rules-based approach calls for: solving the issue peacefully in accordance with the rule of law, particularly international law and UNCLOS the multilateral participation of various stakeholders to account for the various perspectives and interests.

"As we work on building the ASEAN Community, it behooves Member States to now play a positive and meaningful role to solve the disputes peacefully in accordance with the Treaty of Amity and Cooperation (TAC) and reach a stage whereby we are able to help resolve sensitive issues decisively without letting such issues fester and adversely affect the progress of our bilateral or multilateral relations," Del Rosario said.

Code of conduct

Del Rosario also said all are eager to move forward on the Code of Conduct to resolve the issues in the West Philippine Sea.

He said the Philippines is ready to accept a Code of Conduct that calls for the primacy of international law, including UNCLOS, in resolving the disputes in the West Philippine Sea.

"It is ready to accept a Code of Conduct that espouses the concrete and actionable activities to foster cooperation in the West Philippine Sea in the context of international law. And, lastly the Philippines is willing to commit to a Code of Conduct that addresses the very core of the issue and that is to define, clarify, and segregate the disputed areas from the non-disputed areas in the West Philippine Sea," he added.

He pointed out ASEAN is at a critical juncture of playing a momentous role for the resolution of the disputes in the West Philippine Sea.

"We must now muster the will as an ASEAN Community to face these sensitive issues with determination. As you may appreciate, we believe that this is the only way for all of us to move forward and be able to demonstrate ASEAN's leadership in the global community," he said.

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