Israeli firm Ratio Petroleum Ltd. is seeking the approval of the Department of Energy (DOE) for an expansion of the service area that it shall be exploring for oil and gas in East Palawan basin.
Energy Secretary Alfonso G. Cusi (Source: https://www.bloomberg.com)
For the company’s awarded petroleum service contract (PSC) that was signed by President Rodrigo Duterte in October 2018, Energy Secretary Alfonso G. Cusi told reporters that Ratio wants the size of its exploration block to be doubled.
“For the specified area, they (Ratio Petroleum) want to double it. That’s still under discussion and they are proceeding with their project,” the energy chief said.
He nevertheless qualified that discussions are being decelerated by the hit of the coronavirus pandemic, that even the Ratio Petroleum executives cannot travel to the country now to firm up their application for a bigger exploration acreage.
The Israeli firm won Area 4 in the Philippine Energy Contracting Round (PECR) in 2015 – and that covered 416,000 hectares for its exploration and targeted drilling activities.
Based on initial data, that block has potential for 1.2 million barrels of oil; and a possible yield of 2.062 billion cubic feet of gas once it is proven to be of commercial scale.
For its submitted work program with the DOE at the signing of its PSC two years ago, Ratio Petroleum committed to invest $34.35 million (roughly P1.72 billion) for extended seismic survey, data gathering and drilling activities under the initial seven-year duration of its contract.
With the proposed doubling of its service area, the energy department said it does not have specific details yet as to the additional capital spending that the company will be funneling in.
Apart from its awarded service contract, the Israeli firm was also among the parties that submitted an offer to one of the pre-determined areas (PDAs) auctioned by the DOE last year via its Philippine Conventional Energy Contracting Program (PCECP), a modified form of the country’s petroleum contracting scheme.
Ratio Petroleum posted a tender for Area 3, which is also in East Palawan basin. The award of this pre-determined block has yet to be consummated – and all offers are still going through final evaluations by the energy department.
The upstream oil and gas sector is a focus area of investment-enticements by the DOE, although it acknowledges some hurdles given the lingering scourge of the pandemic and the uncertainties still tormenting oil markets.
Beyond that, the country’s investment climate is also afflicted by array of issues ranging from the diplomatic row at the West Philippine Sea, tax treatment concerns on the royalty sharing arrangement as well as low prospectivity of the oil blocks being offered.