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THE
Department of Energy has reportedly given the Philippine
National Oil Co. (PNOC) the green light to negotiate
with Burgundy Global Exploration Corp. (BGEC) for the
development of the Camago-Malampaya Oil Leg (CMOL),
contradicting a controversial Palace order that mandated
the PNOC to follow full public biddings for the purpose.
Executive Order 556, issued last year, had precisely
barred the PNOC from pushing through with its
negotiations—then virtually completed—with
Malaysia-based Mitra Energy Corp. even though the PNOC
asserted that Mitra Energy had the technical competence
to do the sensitive operation of drawing oil from a
portion of the natural-gas site in Palawan controlled by
a multinational consortium.
The
scuttling of the PNOC’s deal with Mitra set back the
sensitive operation, delaying the country’s chance to
draw oil and thus resulting in lost savings in terms of
foreign exchange to import petroleum.
Palace
officials later justified the scuttling of the deal with
Mitra Energy by saying the President wanted full public
bidding no less. Burgundy, one of those interested in
the project, had complained it should get first crack
because it is a Filipino firm. The international
petroleum players’ association later wrote the President
to express concern over the episode, saying it is
established practice that, because exploration is a
high-stakes operation requiring experience, competence
and huge capital, negotiations instead of public
biddings are traditionally allowed.
A source told the BusinessMirror, reacting to the DOE’s
go-ahead to PNOC, said, “Should the DOE go ahead and
give its nod to PNOC to engage in talks with Burgundy,
that would definitely be contrary to President Arroyo’s
directive under EO 556 that the exploration, development
and production of crude oil from the Camago-Malampaya
Oil leg (CMOL) should be done through public bidding.”
The source argued that oil-and-gas exploration contracts
do not necessarily follow the Filipino First policy, as
the oil and gas resource is still owned by the
Philippine government on behalf of the Philippines.
“If that
is the case, with no prejudice to foreign oil-and-gas
exploration companies’ competencies and financial
muscle, then local oil-and-gas exploration companies
should have been given first crack on oil and gas blocks
such as the Malampaya gas-to-power project, among
others,” the source said.
A source
told reporters that the DOE based its decision to
ne-gotiate with Burgundy on the Filipino First policy
enshrined under the Philippine Constitution and has been
held as legal justification on some rulings of the
Supreme Court.
The
source said the DOE then took the lead and gave the PNOC
the approval to negotiate with Burgundy that could
eventually lead to the awarding of CMOL project to the
latter.
“There
was already a decision to allow PNOC to negotiate with
Burgundy so the CMOL project’s implementation may start
soon,” the source revealed.
The
source said the transaction with Burgundy could be in a
form of a joint venture with the PNOC-Exploration Corp.
(EC), and that discussions for the possible award of the
CMOL contract could be expected to progress soon.
Energy
Secretary Angelo Reyes has reportedly been assured by
Burgundy that the drilling to be done will not affect
gas flow or production from the existing Malampaya gas
field.
PNOC-EC
chairman Jacinto Paras earlier hinted that the final
decision on the CMOL project has been made and that a
contractor will be tapped for the project.
Paras
said the DOE will render the final ruling based on
recommendations given by the board of PNOC.
For
every year of delay in harvesting the oil from the CMOL—a
highly technical and sensitive operation that, in the
hands of inexperienced groups, could damage the existing
lucrative natural-gas area—PNOC estimated a diminution
of 7 million to 8 million barrels of oil a year in
ultimate recovery. |
