President Rodrigo Duterte signed an order rationalizing the rules for the engagement of third-party participants under petroleum service contracts.
The president issued Executive Order No. 80 on May 28, a copy of which was released by Malacañang on Thursday. Duterte’s new order repealed former president Gloria Macapagal-Arroyo’s EO 556.
Arroyo in 2006 did away with the “farm-in” or “farm-out” contracts in favor of a “strict bidding procedure” in forging a partnership with interested parties.
Under EO 80, President Duterte allowed Philippine National Oil Company Exploration Corp. to enter into farm-in/farm-out agreements.
Farm-in/farm out refers to a practice, recognized and accepted in the oil and gas industry, of allowing third participation to spread the risks of inherent in oil and gas exploration, development and production.
“The entity acquiring the participating interest considers the transaction as a ‘farm-in,’ while the entity transferring such interest considers the transaction as a ‘farm-out’,” the EO stated.
Under the EO, third parties can participate in the service contracts awarded by the government to PNOC EC. The company can also participate in the service contracts awarded by the government to third parties.