Kuwait Foreign Petroleum Exploration Company (KUFPEC) is formally exiting the Galoc oil production venture in northwest Palawan basin, following the approval of the Department of Energy (DOE) on its withdrawal from the project.
In a disclosure to the Philippine Stock Exchange (PSE) of Filipino firm Philodrill Corporation, which is also an interest-holder in Galoc, it indicated that the operator of Service Contract 14C1 (the Galoc block) already sent formal correspondence informing them of the Kuwaiti firm’s departure from the project.
Following that development, Philodrill similarly conveyed that its interest in the Galoc block had been raised to 10.17782-percent from 7.21495-percent as a result of “the pro rata assignment by KUFPEC of its withdrawn interest.”
The Kuwaiti company entered the Philippine upstream oil and gas industry in 2013 as one of the joint venture-partners in the Galoc project, which yielded commercial oil that became a source of revenue stream not just for its interest-holders, but also for the Philippine government.
KUFPEC had been largely considered a valuable partner having reinforced the joint venture's capital as well as the technical requirements in advancing the Galoc project to commercial fruition.
When it entered the country’s exploration and production (E&P) sector, KUFPEC cornered 26.84473-percent working interest in the Galoc project at a time when many foreign investors were still setting their investment sights on the Philippines.
The Galoc field is not part of the contested territory in the West Philippine Sea, but since the latter part of 2013 and until now, the flow of investments in the E&P sector had already stagnated.
It is the upstream segment of the petroleum industry that the Marcos administration has been trying to reinvigorate, but it remains to be seen if that will result in tangible capital flows in the sector.
Until this time, the blocks that continued to lure interest are those straddling the West Philippine Sea, but since the diplomatic strife with China on territorial claims has not been resolved yet, exploration and drilling activities in these areas practically stalled for roughly a decade already.
Even in the recent state visit of President Ferdinand Marcos to China early this month, the tenet of discussion with President Xi Jinping had just been on the "resumption of talks" with no concrete details as to how the parties will resolve pressing concerns on E&P investments in the contested territory.