Philippines discover deposits of oil and gas in Mindanao
Huge deposits of oil and natural gas have been identified in at least three areas in Mindanao, according to the
Department of Energy (DOE).
DOE undersecretary Guillermo Balce said these big potential sites in Mindanao include the Davao to Agusan basin now being explored by the mainland Chinese company Seng Hong Exploration; the Cotabato basin which covers over 1 mm hectares in Liguasan marsh; and the area straddling Sulu and Tawi-Tawi.
Seng Hong Exploration recently signed an exploration contract with the Philippine government to drill a portion of
the 750,000 hectares straddling the Davao Agusan basin. Seng Hong is also known as South Seas Petroleum, a company
based in Beijing but listed in the Hong Kong Stock Exchange.
Part of the exploration site has been drilled by Alcorn Petroleum and Petrophil in the early 1990s and confirmed to hold huge amount of natural gas deposits. But the two companies left the project at that time, when crude oil prices were still relatively low in the worldmarket, and natural gas was not yet a "commercially viable option," Balce said.
Now that prices of crude have gone up to as much as $ 50 per barrel, the country's top energy officials are looking
for its most affordable alternative, and are now trying to attract foreign companies to tap into the country’s
oil and natural gas reserves, he said.
Normally, it takes five to seven years for the company to conduct exploration. However, Balce said that unlike the Malampaya oil project in the offshore of Palawan, the Chinese company drilling the Davao to Agusan site will find a ready market for oil or natural gas in the Davao metropolitan area.
Balce said aside from the Davao to Agusan basin, another oil potential site is the Cotabato basin, which service
contract is now being held by the Philippine National Oil Corporation. He said the Cotabato basin covers around 1 mm
hectare land in Liguasan marsh, but the largest deposits have been found in the Sultan sa Barongis town of Sultan
Balce noted the government is also currently negotiating for the service contract with BHP Billiton of Australia, who is scheduled to conduct oil exploration activities in the area straddling the Sulu sea and Tawi-Tawi.
"We expect to sign the contract very soon, maybe in the next month or two," he said.
The energy department has embarked on an aggressive promotion of oil and gas exploration in the country, offering 46
contract areas for exploration in the first petroleum contracting round (PCR-1) in August 2003. Balce said another
petroleum contracting round is being considered this year, even as joint exploration contracts are being eyed among
Philippine companies with those of Vietnam and China.
"We expect to sign more service contracts with foreign companies to explore different oil potential sites in the next four months," Balce said, adding, "We’ve already signed three of these service contracts in the last 20 days."
Outgoing Energy Secretary Vince Perez said government expects to sign seven service contracts with foreign companies
wanting to explore potential oil sites in the country in the next four months. Perez said the surge in foreign firms,
interest in oil exploration activities here was a result of the Supreme Court's decision allowing the entry of
foreign firms in mining.
"Thanks to the Supreme Court ruling opening the country’s mining sector to foreign investors, we are starting to feel the spillover effect into our exploration projects," he said.
Under the Petroleum Act, the government will earn some 60 % in royalty of whatever oil or natural gas will be drilled by oil companies from the site.