prospects in the philippine oil and gas sector - doe · secretary vincent s. pérez, jr. department...
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Secretary Vincent S. Pérez, Jr.Department of Energy
07 July 2002
W01/3868
Prospects in the Philippine Oil and Gas Sector
22
Outline of PresentationOutline of Presentation
n Overview of the Philippine Oil & Gas Sector
n Developments in the Philippine Oil & Gas Sectoru Upstream
− Malampaya Deep Water Gas-to-Power Project− Malampaya Oil Rim− Petroleum Contracts
u Downstream− Natural Gas Pipeline− Possible LNG Terminal− Pandacan Oil Depot
n Prospectsu PHILPRA
n Investment Incentives
n Steps Forward
44
Local Oil2%
Imp. Coal 8%
Loc. Coal2%
Geo8% NRE
30%
Imp. Oil 45%
Hydro 5%
Total Energy: 243.4 MMBFOE Indigenous Energy Level: 45%Total Energy: 243.4 MMBFOE Indigenous Energy Level: 45%
Primary Energy Mix Y2000 Primary Energy Mix Y2002
Industry Background Industry Background Overview of Philippine Energy Sector
Imp. Oil37%
NRE30%
Loc. Gas8%
Geo6%Local Oil
3%Hydro
4%
Local Coal2%
Imp. Coal10%
Total Energy: 266.9 MMBFOE Indigenous Energy Level: 52%Total Energy: 266.9 MMBFOE Indigenous Energy Level: 52%
55
10.5710.75.1Foreign Exchange Savings (Million US$)
0.450.40.3Fuel Oil Displacement (MMBFOE)
474,758417,866313,417Oil Production (Bbls)
200120001999
Oil Sector Highlights, 1999-2001
Upstream OilUpstream OilHighlights in the Oil Sector
77
Developments in the Upstream Oil & Gas SectorDevelopments in the Upstream Oil & Gas SectorMalampaya Developments
n Malampaya Deep Water-Gas-to-Power Project now operational supplying fuel to:u Ilijan (1,200 MW)u Sta. Rita (1,000 MW)u San Lorenzo (500 MW to commence 1st
Q2002)
n Malampaya Oil Rim Findu Initially yield estimated at 8,000
barrels/dayu After further testing yield estimate
increased to 23,000 barrels/day
88
Developments in the Upstream Oil & Gas SectorDevelopments in the Upstream Oil & Gas Sector
n Drilled MA-10 well down to 4,860 meters
n EWT at an average rate of ~19,000 barrels per day
n Cumulative production = 1.9 million barrels(December 2001-April 2002)
Malampaya Oil Rim Find
99
Developments in the Upstream Oil & Gas SectorDevelopments in the Upstream Oil & Gas Sector
n Total Service Contracts awarded, 7
n Geophysical Survey and Exploration Contracts (GSEC) – 9
n Farm-in of Shell into South China Resources, Inc. for an offshore oil exploration project in Northeast Palawancovered by GSEC-99
n Awarded GSEC 101 in June ‘02 to Sterling Energy Limited Partnershipu Covers 1,036,00 ha. near Reed Bank offshore
Philippinesu First foreign exploration in the last 4 years
n Recently awarded GSEC to Japan Petroleum Exploration Co., Ltd. (JAPEX)u Covers 328,000 ha. Offshore of Tañon Strait
Petroleum Contracts
1010
Developments in the Downstream Oil & Gas SectorDevelopments in the Downstream Oil & Gas Sector
n Bataan-Manila 1 (BatMan 1)
n Pipeline to connect Manila with the Malampaya Nat Gas Reserve
n Multiple parties interested
n PNOC-EC applied for permit
n FS conducted by JETRO
n Consortium still being eyed
Proposed Natural Gas Pipeline
Malampaya
BatMan 1
1111
Developments in the Downstream Oil & Gas SectorDevelopments in the Downstream Oil & Gas Sector
n Bataan-Manila 2 (BatMan 2)
n To receive LNG importation and supply industrial ecozones in Subic & Clark
n Potentially to supply fuel in Central Luzon and petrochemical plants located in the area
n Proposed site for LNG Terminal
Proposed Natural Gas Pipeline
Malampaya
BatMan 2
1212
Downstream Oil IndustryDownstream Oil IndustryPandacan Oil Depot
n MOU among the City Government of Manila, Caltex, Petron, Shell and the DOE signed last 26 June 2002
n Big 3 agreed to scale down area of operation to widen buffer zone to the surrounding residential community
n Joint operation of integrated facilities
n Creation of a Green Buffer Zone
1414
ProspectsProspects
n World Bank-funded study (1986) provides qualitative assessment of the sedimentary basins’ petroleum potential
u 13 sedimentary basins representing an area of over 500,000 sq km
n Norwegian Agency for Development Co-operation(NORAD) funded study (Feb. 2002) to develop and update Philippines’ petroleum resource classification system
u Philippine Petroleum Resource Development Assessment Project (PhilPRA)
u 16 sedimentary basins representing an area of over 700,000 sq km which show hydrocarbon resource potentials larger than previously projected
Hydrocarbon Potential
1515
PhilPRA ResultsPhilPRA ResultsVast Potential in Hydrocarbons
836
Reserves
137
Potential
2,848
Mapped
5,074
Unmapped
Total risked resources (8,895 million bbl o.e.)
Sedimentary Basins
n Petroleum Resource Distributionu Gas: 57%
u Oil: 41%
u Condensate: 2%
1616
PhilPRA ResultsPhilPRA Results
Total Oil Gas Condensate
Million
(Mean)
Million bbl (Mean)
Billion cf (Mean)
Million bbl (Mean)
Total Resources 8,895 3,629 28,531 165Discovered Resources 973 168 3,841 109
836 43 3,772 109Potential Recoverable Resources 137 125 68 0Undiscovered Resources 7,922 3,461 24,690 56
Hypothetical (Mapped) Resources 2,848 1,341 8,112 55Speculative (Unmapped) Resources 5,074 2,120 16,578 0
Reserves
Oil41%
Gas57%
Condensate2%
Vast Potential in Hydrocarbons
bbloe
1818
Investment IncentivesInvestment Incentives
To cover the period June ’00 – June’03
n Service fee of up to 40% of net proceeds
n Cost reimbursement
n Filipino Participation Incentive Allowance
n Exemption from all taxes except income taxes
n Duty-free importation of materials & equipment
n Accelerated depreciation
Corridor of Focus
2020
Steps ForwardSteps Forwardn Establish Philippine Petroleum Exploration Investment
Promotion Project (PhilPRO) and formulate Promotion Strategy
n Begin building digital National Petroleum Databank –accessible to the private sector
n Prepare overall Industry strategyu Prepare Legislative Agendau Identify exploration areas and formulate appropriate licensing
procedures
n Promotional Roadshow tentatively slated in UK, USA, Canada, Singapore
2121
n Geological promise
n Legal and fiscal regime
n Infrastructure
n Political risk
Determining factors for investments
Steps ForwardSteps Forward
Geolocical promisePoor Good
Gov
t.Tak
eLow
High
High interest from Oil CompaniesPotential for higher Government take
Low interest from Oil CompaniesLow potential for any Government take
Optimized
Fiscal Terms
Poor GoodG
ovt.T
ake
Low
High
High interest from Oil CompaniesPotential for higher Government take
Low interest from Oil CompaniesLow potential for any Government take
Optimized
Fiscal Terms
Geological promise
Gov
t. ta
ke