DOE upbeat on upstream oil industry

THE Department of Energy (DOE) remains upbeat over the country’s upstream petroleum industry despite the pull out of another oil major player.

Jay Layug, DOE undersecretary said that the Shell Philippines Exploration B.V.’S decision to withdraw from Service Contract (SC) 54B may simply be part of its business strategy to position to more attractive exploration blocks in the Philippines.

“Shell is consolidating its exploration plans and pooling financial and technical resources for development of oil and gas in the Philippines,” he said.

SPEX is the local oil and gas exploration and development arm of the Royal Dutch Shell Plc., which has operations in more than 90 countries.

Prior to its withdrawal from SC 54B, SPEX controlled a 45 percent stake in the exploration block in offshore Palawan, which contains the Pawikan prospect.

Nido Petroleum Ltd., one of SPEX’S partners in the contract area, earlier estimated the site to contain approximately two billion barrels of oil reserves.

Late last year, Exxonmobil Exploration and Production Philippines B. V., the local unit of oil giant Exxonmobil, decided to pull out from its investment in SC 56 in the Sulu Sea after drilling at least four wells in the area.

The DOE initially estimated the block to contain about 750 million barrels of oil equivalent, enough to supply the domestic market’s total requirements for a period of seven years.

Despite withdrawing from their respective oil and gas projects, the DOE official said that the department expects the oil giants to continue to participate in the local upstream petroleum sector.

“Shell has expressed to the DOE its continued interest in exploration opportunities in Philippines and will bid for new areas,” he said.

SPEX, in particular, plans to join the Philippine Energy Contracting Round (PECR) 4, where 15 SCS were offered to prospective bidders.

PECR4 is a competitive bid round with the submission of bids for the various blocks being offered due between April and July 2012.

The award of blocks to the successful bidder is expected to be in the second half of 2012.