By Myrna M. Velasco
As the country knocks anew on investors’ doors for them to inject fresh capital into its upstream petroleum industry, President Rodrigo Duterte sets out a promise of “policy stability” to those that will be risking mega-cash resources into the sector.
“This administration always believes that there should be stability in our policies. We make sure that when investors come, they come here for the long term,” Cabinet Secretary Karlo Alexei Nograles told reporters.
In the President’s speech delivered by Nograles, Duterte asserted “this PCECP and all other petroleum exploration and development undertakings of the DOE (Department of Energy) are priority of my administration.”
The President added “the DOE and the entire Philippine government will go above and beyond to make doing business in the country easier and more attractive.”
Taking cue from the President’s assertions, the Petroleum Association of the Philippines (PAP) appealed for firm government action on guaranteeing policy stability in the industry.
There are array of issues still hamstringing capital flow in the sector – chiefly the protracted legal battle on the Malampaya tax case, the muddled policy on farm-in and farm-out of interests or shareholdings in petroleum blocks; as well as the long standing moratorium on petroleum exploration and drilling at classified “conflict areas” within the West Philippine Sea.
As sounded off by PAP Chairman Rolando J. Paulino Jr., the foremost appeal of investors is “for our government to make fiscal terms stable,” stressing further that “investing in the oil and gas industry is not cheap and it’s not unrisky – there’s a lot of risks involved.”
Paulino highlighted that an investor “cannot install a platform and pull out after five years,” hence, he noted that it is highly critical that investments in the sector are “protected under stable fiscal policies.”
One best step for the country, he said, is to look at the “great examples of investment environments and policy regimes” enforced by other countries – the likes of Malaysia and Brunei; and see “what experience that they have that we can actually replicate in the Philippines.”
Meanwhile, Duterte justified that the country’s petroleum contracting design had been modified into PCECP as “it was found out that the PECR (Philippine Energy Contracting Round) was very restrictive in terms of time and areas which potential investors could explore and develop.”
The President said “many local and foreign companies have been hindered by the fact that the areas they wished to explore – particularly the frontier areas – or those with little to no data available, were not included in the list of areas offered in the PECR.”
The PECR, which lasted up to five rounds of petroleum contracting, was a business model first adopted by the Arroyo administration and carried through up to the Aquino administration.
Duterte qualified though that “the experience gained from the PECR provided the DOE with added insight as it developed a program that would be able to accommodate proposals for areas that are outside the pre-determined list.”