Udenna pegs oil exploration cost at $30M

Davao-based businessman Dennis a. Uy’s Udenna Corp. might set aside roughly $30 million to pursue oil exploration activities in waters disputed by China.

“It’s $15 million per area,” Phoenix Petroleum Philippines Inc. Senior Vice President for External Affairs Business Development and Security Raymond Zorilla said in a text message Tuesday when asked about the size of investment needed for Udenna Corp. to push through with the exploration activities.

Udenna Corp., the parent firm of Phoenix Petroleum, nominated to explore areas 7 and 8 blocks that are within Reed Bank, also known as Recto Bank.

China, Philippines, Vietnam, Malaysia, Taiwan and Brunei all claim parts of the South China Sea, which is known as West Philippine Sea in the Philippines.

Its nomination to explore the said

blocks was opened by the Department of Energy (DOE) late Monday afternoon.

Aside from Udenna Corp.,the Panglilinan-led PXP Energy Corp. also submitted a nominated bid for area no. 6 block, which falls in the North of Reed Bank area of South China Sea.

PXP said and Philodrill Corp. earlier submitted a bid to conduct oil and gas exploration activities in area no. 7, one of the 14 predetermined areas (PDAS) offered by the DOE under the Philippine Conventional Energy Contracting Program (PCECP).

“We look forward to being granted a new service contract in the Sulu Sea,” said PXP President Daniel Stephen

Carlos during the company’s annual meeting last July. “Once a new service contract is awarded, our immediate plan is to re-process 1,600 square kilometers of 3D data.”

PXP Energy holds a 78.98-percent operating interest in Service Contract (SC) 72 or the contract to explore Recto Bank in the West Philippine Sea through Londonlisted Forum Energy Plc. It also has a direct operating interest of 50 percent in SC 75 northwest Palawan. It is currently waiting for guidance from the Philippine government in respect to any future activity in the SCS.

“PXP, through Forum Energy Limited, will take guidance from the Philippine government in respect of any future activity in SC 72 and SC 75. The company is mindful that the Malampaya gas resource, which supplies about 40 percent of Luzon’s power requirements, could be exhausted within the next decade.

The company, therefore, remains hopeful that the force majeure imposed on SC 72 and SC 75 will be lifted by DOE soon for the company to be able to resume exploration works in these SCS,” it said earlier.

The DOE also opened the bid nomination of Troika Giant Power Corp., which wants to explore Area no. 5 Block or the Mindoro-cuyo Basin.

Nominated area no. 6 covers 1.432 million hectares while nominated area no.7 covers 1.5 million hectares. The last nominated area, no. 8, is 1.412 million hectares. The DOE said these are not disputed areas as they are within the Philippines’s exclusive economic zone.

All bids, according to the DOE, have complied with the legal and technical requirements. However, their bids are still subject to approvals.

Evaluation

PURSUANT to the Guidelines and Checklist in DOE Department Circular DC2017-12-0017, or the PCECP Circular, the DOE'S Energy Resource Development Bureau's Review and Evaluation Committee (REC), shall perform a "completeness check" on all submitted area applications. This will determine if the submissions may qualify for further substantive legal, technical, and financial evaluation.

Qualified applications shall be subjected to further exhaustive evaluations from the REC, before the endorsement of the highestranked application to the DOE Secretary. This would then be followed by the signing of a corresponding SC by the President.

“There will be a memo to [DOE] Secretary Cusi informing the bid opening results, followed by a letter to applicants on results of completeness check to undergo substantive legal, financial and technical evaluation. The documents will then be evaluated by the technical working group [TWG] for 15 working days. After which, REC will endorse the result of the TWG evaluation that could take 5 working days.

The REC will then submit a memo to Secretary Cusi for endorsement of the winning applicants. The secretary will make an endorsement to the Office of the President, estimated to take 5 working days,” DOE Assistant Secretary Leonido Pulido III said in a text message when asked how long the post evaluation will take before the agency seeks Malacañang’s approval.

The nomination of an area for exploration is one of the two ways by which investors can participate in the DOE’S PCEP. The process for this option begins by requesting the DOE for an Area Clearance.

The other option is choosing an area from the 14 PDAS offered by the DOE.

The DOE is hoping that the contracting round would result in finding another Malampaya, the offshore Palawan project that fuels 5 power plants in Batangas province with a combined capacity of 3,211 megawatts.

That natural gas field is estimated to be depleted by 2024.

In a statement, Cusi said Udenna, Troika and PXP Energy passed the technical, legal, and financial “completeness check” conducted during the opening of the bids for nominated areas in Offshore Mindoro and Recto Bank Basin.

“As quarantine restrictions gradually ease, we actively welcome all PCECP applications that will help us maximize the exploration, development, and utilization of our indigenous energy resources to help us attain energy security and independence,” he said.