EO 556 impedes entry of 2 foreign investors in petroleum blocks

Two foreign investors are impeded into their farm-in investment targets into specified petroleum blocks in the country because of the prescriptions of Executive Order (EO) 556 which was issued by the administration of President Gloria Macapagal-Arroyo in 2006.

These blocks, according to official sources from the Department of Energy, are Service Contracts (SC) 57 in northwest Palawan basin; and Service Contract 59 in Southwest Palawan.

In SC 57 or the Calamian block which straddles an area of 7,200 square kilometers, China National Offshore Oil Corporation (CNOOC) farmed in for 51percent interest in the service area, but its entry is still pending for Malacañang approval due to the provisions of EO 556 which requires a “strict bidding procedure” instead of the usual farm-in and farm-out deals in the acquisition or divestment of interests in petroleum blocks.

At SC 59 that is under Philippine National Oil Company-Exploration Corporation’s (PNOC-EC) charge, the prospective investor is Spanish firm Repsol S.A., but such investment is similarly hobbled by the Arroyo-issued EO around 12 years ago.

“CNOOC’s entry into SC 57 was affected by the EO so until now, their farm-in deal with Mitra Energy and PNOC-EC (Philippine National Oil Company-Exploration Corporation) cannot be firmed up,” an energy official has noted.

With CNOOC’s portended farm-in deal for the block’s majority stake, PNOC’s interest will be down to 28-percent; and Mitra Energy will hold the balance of 21-percent.

The SC 57 acreage is within the Northwest Palawan block; and with the targeted farm-in, the consortium is eyeing additional 2,200 kilometers of 2D seismic data acquisition that shall be on top of the 3,300 km acquired by the previous contractors.