A matter of time

Title

A matter of time

Creator

Capino, Alvin

Identifier

The economy

Language

English

Source

The Republic (2) 31 March 1973

Year

1973

Subject

Oil industries -- Philippines

Rights

In Copyright - Educational Use Permitted

Fulltext

The Economy OIL A matter of time Four oil strikes in Sulu, Mindanao proper, Cebu and Northern Luzon and the discovery of the highest gas pressure ever encountered in local ex ploration for crude oil augur well for the renewed government efforts to hasten the discovery of the elusive “black gold’ in the Philippines. The series of oil strikes is a fitting climax to the rationalized oil search program recently implemented by the government through a Presidential Decree providing for incentives and government support for indigenous oil exploration. Government experts are now con ducting tests at the four sites where />il has been discovered. It was pointed out that the outcome of the tests and analyses of the samples will provide data that will guide any future pro gram of exploration and development. Excitement swept through the stock markets when news of the oil discoveries was announced. Specula tive oil issues registered price increases of 3 to 4 points over their stock mar ket p»ee- both in the Manila and the Makati Stock Exchanges. The Philippine oil strikes came on the heels of a series of oil strikes off the east coast of Sabah. The oil and gas deposits discovered by Esso in Sa bah adjoin Philippine overseas ter ritory and are only 17 kilometers touth of the Philippine border and Southwest of the Turtle islands. Secretary Arturo Tanco, Jr. of the Department of Agriculture and Na tural Resources in a report to the Pres ident said that the offshore oil dis covery was of special interest to the Philippines for two reasons: • Its .proximity to the present ex ploration sites at Sulu Sea; and • Its reported gravity of 42 degrees American Petroleum Institute (API) standard, which makes it Quest for oil under the m. THC REPUBLIC 31 March 1973 Oil exploration and development: a partnership of Filipino and alien consortia. in this respect characteristically close to Philippine crudes dis covered in Cebu and Luzon. The specific gravity of oil discover ed in Cebu was placed by the Bureau of Mines at around 40 degrees (API) while oil found at the Bondoc Penin sula, Quezon province, is close to 40 degrees (API) Esso's Nymphe Nord No. 1 off shore well near Sabah, according to re ports, is yielding some 500 barrels of oil and 3.9 million cubic feet of gas per day at approximately 6,000 ft. depth. Sabah Oil Petroleum, one of the subsidiaries of the Royal Dutch Shell Group, also announced oil strikes in two wells in the same area. The first well, some 35 miles offshore north west of Kota Kinabalu, has produced some 1,800 barrels a day. The second well is still undergoing production tests. Although very little activity in oil exploration was conducted in the Phil ippines during Spanish times, oil was known to be present in the Philippines even then. Two wells, 800 and 1,300 feet deep, were drilled by Smith Bell and Co., in 1896. The two wells, lo cated in Cebu, still yield about two barrels each of oil per day. In 1938 the government through President Manuel L. • Quezon in col laboration with the private sector hired the. services of Grant W. Corby with a group of geologists to survey the Philippines for oil possibilities. The war, however, temporarily closed an era of unsteady oil exploration in 1941. To attract foreign investments to come into the Philippines to assist in the oil exploration efforts the Pe troleum Law was passed by Congress in 1949. With the new law, oil exploration activity picked up considerably with the coming of several foreign oil com panies. A total of 27 locally registered oil companies with a large foreign par ticipation and with a total of Pl 92 million starting capital operated from 1949 to 1968. Offshore concessions in the Visayan shelf, Lingayen, Aparri and southern Palawan-NE Borneo shelf as well as onshore concessions were awarded to American Asiatic Oil Corporation, Mobil and Visayan Exploration, White Eagle, Amoseas and others. The lack of commercial discovery and the depletion of financial resour ces of the local oil companies in the Philippines due to the approaching ex piration of the Laurel-Langley Agree ment resulted in the reduction of local oil exploration in a mere trickle. World-wide offshore discoveries in 1969 heralded a new phase in oil ex ploration with emphasis on offshore areas. The Philippines started the stak ing of several offshore oil concessions in the Borneo-Palawan continental shelf. The first nine concessions were filed by Philex Mining, Sabena Mining and Baguio Gold Mining Co., in off shore Borneo. Additional concessions were filed by the same three com panies over the Cuyo shelf and the northeastern Palawan in 1970. Philip pine Overseas Drilling and Oil Devel opment Corporation also applied for oil exploration concessions on north western Palawan. Several other applications were ap proved for oil exploration in the Cebu and Mindanao offshore areas. Since 1949, when oil exploration started, until the declaration of mar tial law, it is estimated that more than Pl billion in risk capital had been in vested in the Philippines. A new era in oil exploration began when President Marcos through an amendatory decree spelled out the rules and regulations covering the ex ploration and production of crude oil in the Philippines. The decree paved way for the coming of foreign invest ment and foreign technology. Presidential Decree No. 87, which amends Presidential Decree No. 8, au thorizes the government to directly undertake petroleum exploration sub ject to existing private rights. According to the decree the govern ment may also indirectly undertake under service contracts. These con tracts may cover free areas, national reserve areas or petroleum reservations whether onshore or offshore. In every case, however, the contractor must be technically competent and financially capable as determined by the Pe troleum Board to undertake the operations required in the contract. Just before 1972 ended the first service contract was signed between the Philippine government and a con sortium of two foreign and two local oil exploration companies. The Pres ident, who witnessed the signing of the contract, said the event “marks a milestone in our efforts to explore oil and develop the natural resources of the country. The President also said he was elated by the signing of the contract, which had been delayed by the inabil ity of Congress to act on a deal design ed to speed up oil exploration in the country, thus, compelling him to issue Presidential Decree No. 8 after the proclamation of martial law. The two foreign companies com posing the consortium are Chevron Overseas Petroleum Inc. and Texaco International Petroleum. The two local companies are Astros Mineral and Oil Corp. And Jabtract Mining and Industrial Corp. The consortium will explore for oil in an offshore concession located in southern Palawan and the Sulu Sea. Under the contract the consortium will bring in $8 million in new invest ments and undertake drilling opera tions for five years. The contract is good for seven years, renewable for another three years. If the oil dis covery is considered of commercial quantity, the contract may be re newed for 25 years renewable for another 15 years. The government will get 40 percent of whatever production is realized un der the contract. Chevron Oil Co., in an announce ment after the contract signing, said that it would undertake the seismic work and would drill at least one well during 1973. Eastern European oil exploration companies have also signified their in tention to join the oil exploration pro gram being, undertaken by the govern ment. Offers had been received from Rus sia, to drill oil in the Philippines with their own equipment and technical ex perts and leave once oil is discovered. These offers from the Socialist bloc nations are under serious study by Fi lipino economic planners. Three more independent foreign firms have also offered to invest in oil exploration under the service contract system decreed by President Marcos. The proposal of the three com panies — Broken Hill Pty. Ltd. of Aus tralia, Marathon Oil and Union Oil, both of the United States — is still be ing discussed by the Petroleum Board. With the renewed interest in oil possibilities in the Philippines, selfisufficiency in crude oil to serve the steadily increasing needs of industries and the citizens may not be faroff. ALVIN CAPINO Page 15

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15

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