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NEWS UPDATES 3 October 2009

Philippines: South Sulu Sea seen holding 7 years’ worth of crude

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Oil reserves in the Phillipines’ South Sulu Sea—now being scoured by the world’s largest petroleum and mining companies—is projected to hold up to seven years’ worth of local crude supply, reported the Manila Times.

In a briefing, Philippines Energy Secretary Angelo Reyes said that based on initial findings, service contract 56 (SC 56) may hold up to 750 million barrels of oil.
“If we are successful here it would provide enough petroleum products for seven years. In other words, it’s enough to supply us with our current requirement for seven years,” he said.

SC 56 lies in the South Sulu Sea, 900 kilometers southwest from Manila. The area is considered to be one of the most prospective areas for oil and gas exploration because of its proximity to petroleum producing sites in Borneo.

The exploration block is controlled by ExxonMobil, the world’s largest publicly traded international oil and gas company, BHP Billiton, the world’s largest mining company, and Malaysian firm Mitra Energy.

The Energy department chief said that the consortium would start with their exploration activities in SC 56 next week with the arrival of their contracted drill rig, which left Indonesia Friday.

He added that should the consortium be successful in finding oil in the area, the country would become on a par with its oil producing neighbours in the region.

At present, the Philippines produces an equivalent of less than 10 percent of its 300,000 barrel daily oil requirement.

However, Ian Fischer, ExxonMobil Exploration and Production Philippines, BV managing director, said that finding petroleum reserves in the exploration block may be “very challenging” as it is a “very high risk operation.”

Despite this, the consortium would still spend around $100 million to drill an exploration well in the block.

Depending on the results, they may opt to drill another well for about the same investment cost.

“But right now we need to understand what’s in the first well before we make any decisions for future investments,” he said.

To help the ease the consortium’s burden of finding oil in the country, the Department of Energy set up a one-stop-shop together with the Energy department, Bureau of Customs, National Quarantine Office, Department of National Defense and the Bureau of Immigration to cut red tape.

Reyes said that the one-stop-shop will be put up in the consortium drill rig to make it easier for them to transact business in the country.

The Department of Energy also plans to institutionalize the said single-transaction window aboard offshore facilities with other petroleum companies.

“It is a common lament of investors that there is no one-stop-shop. So what we’ve done here is to establish a one on the rig so that investors particularly in the oil exploration will find it more investor friendly,” he said.


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