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August 31, 2008

Philippines' Galoc oilfield needs more repairs
More repair work is needed on the infrastructure that is to produce crude from Philippines' new Galoc oilfield and first production has been further delayed to mid-September, Reuters quoted the field's operator as saying Friday.

Galoc Production Company (GPC) said the mooring and riser system, which had been damaged when the Floating Production Storage and Offloading system (FPSO) was disconnected in June, had been repaired.

But more problems emerged with inspection showing signs of accelerated corrosion of some hydraulic fittings, the company said.

"The decision has been made to replace these prior to introduction of hydrocarbons into the riser system ... first oil is expected mid-September," the company said in a press release.

This is at least the fifth time the field's start-up has been delayed from initial expectations for a start in the first quarter of this year.

Oilfields' start-up dates are prone to repetitive slips while the infrastructure needed to extract and transport the oil is put in place.

Offshore Galoc oilfield is expected to produce about 17,500 barrels per day (bpd) of light, high-sulphur crude once it comes on stream.

The field has great significance, not only for the Philippines, whose meagre output it will lift by some 70 percent to above 40,000 bpd,

but also for Otto Energy and Nido Petroleum, two small independent Australian companies that have bet on the under-explored Philippines.

The FPSO was disconnected on June 20 ahead of the passage of Typhoon Fengshen, which wreaked havoc in central and southern Philippines.

GPC, which comprises European trader Vitol with a 68.62 percent stake, and Otto Energy with the remaining 31.38 stake, 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 crude, which has a higher sulphur content than most other Asia-Pacific crudes at 1.64 percent.

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