Philippine Energy Contracting Round
2006-2007

Dr. Guillermo R. Balce and Ismael U. Ocampo

Department of Energy

To date, Philippines has twenty-six (26) active Service Contracts (5Cs), three (3) in process for SC awards, and nine (9) areas offered for Philippines Energy Contracting Round (PERC).

As backgrounder, Department Circular DC2003-05-005 was isssued to define the procedures of the Petroleum Blocking Systems. Upon completion of the NORAD-funded Philippine Petroleum Resource Assesment (PHILPRA), the first Philippine Petroleum Public Contracting Round (PCR-1) was conducted on 5 August 2003. A total of forty-six (46) contract areas in offshore Palawan and Sulu Sea with a total of 222, 914 square kilometers was offerd during this round. SC 56 in Sulu was awarded to BHP Biliton on 5 August 2005 and was subsequently farmed-out to Mitra Energy Ltd on 25 January 2006. SC 56 has a total area of 8,620 square kilometers.

Another Department Circular DC 2005-04-004 was in April 2005 for investment promotion and contracting rounds geothermal and coal prospective areas. With funding assistance from USAID, round preparation was made and the Philippine Energy Contracting Round (PECR 2005) was launched in 31 August 2005. Four (4) contract areas, with a total area of 49,789 square kilometers, in offshore Palawan and Sulu Sea were offerd during this round. The service contractors were evaluated according to their submitted work program, and financial, legal, and technical qualifications. Two of the areas were awarded to Burgundy Global Exploration Company, and the other two areas are awaiting approval of the President.

The Service Contract System states that all energy resources belong to the State, and government supervises all activities related to the energy resources exploration, development and production. A contractor must be legally, technically, and financially capable to carry out petroleum operations and shall assume both financial and exploration risks involved with it. However, upon commercial production, a contractor is entitled to 40% of net proceeds from production and other privileges.