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Philippine Galoc oil unfit for local use


October 12, 2008

Philippine Galoc oil unfit for local use
Even before the first flow of oil from the Galoc field, project operator Galoc Production Company (GPC) already set on record that the crude to be extracted will not be fit for domestic use, reported a local daily.

The Manila Bulletin quoted GPC country manager Kay Palma as telling reporters that "the oil recovered from the Galoc field will not be used for domestic supply as the country lacks the facility to refine its type of crude."

The paper noted that such pronouncement would ‘dash all hopes that the Galoc find will shore up the country’s energy independence’ or that it will displace about 6.0-percent of the country’s current oil imports.

Like the previous crude production from the Malampaya field, it was known that the problem with the Galoc find would be the oil’s high mercury content which is best suited for processing in bigger refineries in South Korea and Singapore, so the toxicity problem could be well-managed.

Despite such initial claims, the country’s refiners noted they are still willing to do testing for the Galoc oil to assess if it would be compatible and feasible to process domestically.

In an interview with the Manila Bulletin, Pilipinas Shell Petroleum Corporation vice president Roberto S Kanapi noted that if the Galoc field contractors would agree, they would request for testing of the crude oil at its Tabangao refinery in Batangas.

"We need to test it if it would match our production slate. If they are willing, we can request that we do the testing," he said.

If the Galoc oil reserve will be compatible with Shell’s crude slate, Kanapi noted they are open to negotiations as potential taker of the oil yield.

The same concern was raised by major oil refiner Petron Corporation, noting that the first step will be for the Galoc production to be tested at the local refineries.

In recent years, the oil produce from the Malampaya field had to be sold and shipped to bigger refineries in Singapore and Korea because they are not feasible to be processed locally.

At that time, instead of helping shore up the country’s energy independence, the return for the Philippine government was to align the crude shipments among the country’s dollar-earning ventures.

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