The interest in Philippine oil and gas exploration has declined amid weak global oil prices.
The Energy Department said Wednesday few companies joined the government’s fifth and latest round of auction for oil and gas exploration prospects and that it would award service contracts next month to only two winning bidders.
“That’s the target,” Energy Secretary Zenaida Monsada said about the awarding schedule.
The government evaluated the bid applications based on their work program (40 percent), financial qualification (40 percent) and technical qualification (20 percent).
Only three companies submitted bids on four areas but the department qualified only two on three exploration sites after submitting complete application requirements.
The department attributed the low turnout in the fifth round of bidding to the decline in world oil prices. The government offered 11 oil and gas prospects to the private sector for development.
Energy director Ismael Ocampo said the department would likely hold the next auction of contract areas next year, hopefully when oil prices have stabilized or gone up.
The areas offered included Area 7 (Recto Bank block) covering 468,000 hectares, which received an offer from Filipino company Colossal Petroleum Corp., an affiliate of listed Coal Asia Holdings Inc. led by businessman Dexter Tiu.
“Of course, we consider Area 7 within our EEZ [Exclusive Economic Zone]… It’s part of our economic interest,” Abad said.
Colossal also submitted a qualifying bid for Area 5 (Northeast Palawan block) covering 576,000 hectares.
Ratio Oil Exploration Ltd., an Israeli company, meanwhile, applied for a service contract for Area 4 (Northeast Palawan Block) covering 416,000 hectares.
The department accepted the offer of Ratio Oil after it submitted complete documentary requirements.
The department, however, disqualified Yulaga Oil ad Exploration Enterprises for incomplete application documents for Area 1 (Ragay Block).
Areas that were offered but did not receive applications include Area 2 (Panay Block), Area 3 (Panay Block), Area 6 (Southwest Palawan block), Area 8 (West Luzon block), Area 9 (West Luzon block), Area 10 (West Luzon block) and Area 11 (West Luzon block).
Areas that did not receive offers will likely be included in the next bidding round.
“The initial feedback during the roadshow was the low oil prices. We cannot deny that there were problems encountered in the area of oil and gas,” Energy director Rino Abad said earlier.
Abad said most oil and gas firms had realigned their budget, focusing instead on existing oil and gas assets.
The energy official said the companies that would receive awards on service contracts must invest around for $40 million for oil and gas exploration and development in their respective contract area.
Each service contract covers seven years of exploration, which can be extended for another three years, and 25 years of production, which is extendable for another 15 years.
There are 29 active petroleum service contracts in the Philippines with Shell Philippine Exploration Corp., Total E&P, Otto Energy Ltd., PNOC Exploration Corp., Nido Petroleum ltd., The Philodrill Corp., Pitkin Petroleum Corp. and Galoc Production Co. among the government’s operator-partners.
The Philippines hosts the $4.5-billion Malampaya natural gas project, the country’s largest and most successful field, providing for 40 percent of the Luzon’s power needs.