By Myrna M. Velasco
At least six petroleum service contracts (PSCs) have been recommended by the Department of Energy’s (DOE) Centralized Review and Evaluation Committee (C-REC) for the final evaluation and approval of Energy Secretary Alfonso G. Cusi.
C-REC Chairman and Undersecretary Donato D. Marcos indicated that the proposed PSCs had already been submitted to the Office of the Secretary, and if all of the contracts will be approved, they will be recommended next to the Office of the President for the signing of service contracts.
There had been seven submissions received by the DOE in its August petroleum bid round done under the ambit of the Philippine Conventional Energy Contracting Program (PCECP), which is the modified version of oil and gas blocks contracting under the Duterte administration.
It has been revealed by the DOE’s C-REC though that one of the PSC tenders had been rendered “disqualified” on technical grounds, due to “error” in one of its submitted requirements.
Of the pre-determined areas (PDAs) auctioned by the DOE, four submissions had been received, chiefly from: Israeli firm Ratio Petroleum for Area 3 in East Palawan basin; Sulu Sea Energy Resources and Development Corp. and Esmaulana Global Venture Co., Inc. for Area 6 which is in Sulu Sea; the joint venture of Philodrill Corp. and PXP Energy Corp. for Area 7; which is also in Sulu Sea; and Esmaulana Global Venture Co., Inc. for Area 10 which is the Agusan-Davao basin.
For the nominated areas, it was Sulu Sea Energy Resources and Development Corp. that made an offer for the Sulu Sea basin; Troika Giant Power Corp. for East Palawan; and Superior (SG) Shipyards, Inc. for Ragay Gulf.
The energy department’s evaluation committee hinted that the “disqualified” offer covers one of the PDA blocks in a basin in Mindanao, hence, only three from that bid round had been recommended for the secretary’s final go signal.
In the template petroleum service contract issued by the DOE, it upheld the 60:40 royalty sharing prescription of Presidential Decree 87 or the Philippine Oil and Gas Law – and that the income of the service contractor shall be integrated into the revenue share of the Philippine government.
Under Section 11.01 of the PSC model contract, it was stipulated that “the contractor shall be liable each taxable year for Philippine income tax under the provisions of the National Internal Revenue Code and the Act, both as amended,” emphasizing that “the Philippine income tax shall be part of the government share, subject to applicable laws, rules and regulations.”
On the petroleum blocks that failed to fetch bids during the recent PCECP, the C-REC propounded that these be transformed as “areas for nomination” and the investors could submit tenders on them year-round or any time at their preference.
From the latest contracting round, the DOE admitted that “weak data” had been assessed as among the factors that weighed down investors’ interest – and on top of that, the department is also tugging its way into enticing investors with more extensive technical experience in oil exploration and development; plus the global players that have multi-billion dollar financial resources in case discoveries will turn out commercially viable in the future.