Chinese company launches onshore oil project in Cebu

PRESIDENT DUTERTE warned residents of Alegria, Cebu, to brace for the influx of local migrants as a Chinese company launched on Saturday the commercial operation of the first onshore oil discovery in the country.

“Prepare for a massive migration,” he told the townfolk who witnessed the event, which was hosted by China International Mining Petroleum Co. Ltd. (CIMP), the entity behind the project that expects to drill at least 3 million barrels of oil up in the mountains of Alegria in the next 19 years.

CIMP, a company 51% owned by Hong Kong-listed Polyard Petroleum International Group Ltd., has invested $30.80 million in Service Contract (SC) 49 in the oilfield, said the Department of Energy (DoE).

Mr. Duterte described the project as a “magnet that draws people together.”

“But since they are Filipinos, you should accommodate them and partake of the bounties of what God has given us in the bowels of the earth,” he said.

The bounty is an initial extraction of 200 barrels a day and eventually 1,000 barrels daily from the oilfield, said Edgar Benedict C. Cutiongco, CIMP assistant country manager.

“We sell it locally. We have industrial buyers,” he told reporters. “But at this point, kasi nga sinisimulan pa lang

namin (because we’re just starting the project), we’re looking at the best possible option in our sales. So hindi

pa kami nakaka- establish ng relationship (we have not yet established a relationship).”

The DoE monitors six exploration wells drilled by CIMP and its partners. CIMP acquired 80% participating interest in SC 49 in southern Cebu and became its operator from July 1, 2009. Skywealth Group Holdings Ltd. holds a 16% interest, with Phil-Mal Energy International, Inc. holding the rest.

Drilling of the first well started in October while drilling for the sixth was completed in March 2018.

The community or the barangays that host the oil field stand to corner 14% of the “profit oil” of Alegria, Mr. Cutiongco said.

Profit oil is the remaining gains from production after the participating partners have been compensated for their investments and operating expenses. The law requires 60% of profit to go to the government, and 40% to the investors. The government share is divided as 60% for the national coffers, 18% for the municipality, 8% to the provincial government and the rest to the barangays.

DoE Secretary Alfonso G. Cusi said: “What CIMP is doing here at Alegria is very good for the community especially with the joint declaration of commerciality of the two wells that they are developing.”

“The quantity of production is still not that big but that will be ready enough to power some of the cement factory, some canning factory and that would help us also save dollars,” he added.

Mr. Cutiongco said Alegria’s potential is not limited to oil as the field also has extractable gas.

For now, he said the thrust of the investing partners is the drilling of the areas with oil, with the gas areas to follow with the needed investment. He added that the commercial operation of SC 49 would be followed by a “sub-project.”

“We are planning to put a small gas-fired plant to produce electricity,” he said, adding that CIMP will start with a 6-megawatt (MW) power plant, or a two unit facility each with 3-MW capacity.

The Alegria oilfield covers a land area of 197,000 hectares, with about 42,749 hectares allotted to the production area.