A joint venture that includes Oriental Petroleum and Minerals Corp. said Monday production at the Galoc oil field in northwest Palawan will be suspended in September amid the low oil prices brought about by the coronavirus pandemic.
Oriental Petroleum, a joint venture partner of Service Contract 14, Block C-1 (Galoc block), said in a disclosure to the stock exchange that the operator, Galoc Production Company, set the cessation of the oil field on Sept. 24.
This came after the issuance of the termination notice from the floating production storage and offloading service provider, Rubicon Offshore International.
“The matter has been relayed to the DOE [Department of Energy] and is seeking approval of the initial drawdown on the abandonment fund for the implementation of the suspension plan,” Oriental Petroleum said.
Oriental Petroleum said GPC relayed its total commitment to the long-term future of the Galoc asset “and is currently evaluating several scenarios to retain flexibility for the earliest possible production re-start as and when the market conditions improve.”
An industry source said production would stop starting October with a possible resumption once oil prices in the world market improve.
“There were huge losses per barrel of oil produced at current price,” the source said.
The benchmark Dubai crude plummeted by about 66 percent to $23 per barrel by end-March from $67 a barrel as of end-December last year.
Galoc oil field has been in production since 2008 and yielded nearly 20 million barrels. There are four producing wells that flow into FPSO Rubicon Intrepid which has 450,000 barrels of storage capacity.
Crude oil production from the Galoc field has declines in recent years, averaging 2,100 barrels of oil per day last year.
Energy Secretary Alfonso Cusi earlier said oil and gas firms would likely review their investments amid the COVID-19 pandemic.
“We are foreseeing that the investment might be held back by the investors because of the COVID. They will be rethinking whether it is worthwhile pursuing the project considering the problem with oil supply issue, whether the oil price will be able to recover,” Cusi said.
“Let’s be realistic because there will be tightening of credit. There will be some delay as some investors are withholding their capital investment so that will really affect [their investment decision],” he said.