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PH to court American, African investors next on petroleum contracting


By Myrna M. Velasco

Department of Energy (DOE) logo

Department of Energy (DOE) logo


Following a productive first leg of its international roadshow in Singapore, the Department of Energy (DOE) will be courting American and African investors next on the country’s petroleum contracting.

DOE Assistant Secretary Caron Aicitel E. Lascano disclosed that the next round will be in Cape Town, South Africa in November – at an event of the 800-member strong American Association of Petroleum Geologists (AAPG), which is anticipated to be attended by most of the world’s biggest oil industry players, including national oil companies (NOCs) and energy multinationals.

“In the Cape Town roadshow, we can take advantage of promoting our petroleum contracting to an array of investors – primarily American and African investors and the rest of the world who will be in that event,” she said.

The energy official indicated that the Philippines is also being provided a booth at the AAPG 2018 International Convention and Exhibition (AAPG-ICE) to be held at the Cape Town International Convention Centre – giving the country an opportunity to widely showcase its offer of petroleum service contracts under the Duterte administration-modified Philippine Conventional Energy Contracting Program. The AAPG event will be held parallel to the Africa Oil Week in the same venue.

The initial roadshow in Singapore yielded highly favorable outcome – with 18 companies seeking one-on-one meeting with the DOE delegation; while the rest have signified interest via their business chamber affiliations. These prospective foreign investors include those of Singaporean, Canadian, Australian, Spanish, British, French, Japanese and Chinese firms.

The oil and gas blocks being offered by the Philippines to investors are of two modes: the 14 pre-determined blocks (comprising of eight shallow and six deep-water drilling prospects); and the other is via nomination of the investors’ preferred service areas.

For the pre-determined areas, DoE geologist Gilbert W. Calangi explained that investment-offer will include a data package with an applicable application fee of non-refundable P200,000. The application period is for 180 days.

In the nominated areas, investor-applicants can submit their preferred petroleum block to the DOE; and the nominating party shall be undertaking the publication of such at its own expense. The application is also at P200,000, but it will be subject to a 60-day challenge period; wherein the challenger will be posting a fee of P1 million.

On evaluation of the offers, the criteria set forth by the Centralized Review and Evaluation Committee (C-REC) of the DoE shall be on these ratings: 40-percent for the work program submitted; 20-percent on technical qualifications and 40-percent on financial qualifications. Legal qualifications shall be rated either “pass or fail” depending on the completeness and validity of required legal documents.

In terms of incentives, it will be a 60:40 royalty sharing arrangement in favor of the Philippine government and in keeping with the provisions of President Decree 87 or the Philippine Oil and Gas Law.

Petroleum service contractors shall also be entitled to Filipino Participation Incentive Allowance (FPIA) at a minimum of 1.5-percent and maximum of 7.5-percent of gross proceeds; cost recovery of up to 70-percent of gross income from petroleum production in any calendar year with the unrecovered costs to be carried over in the succeeding calendar years.

On importation of equipment, they shall also be exempted from all levies, tariffs, duties, compensating tax and value added tax.

There is also a provision for special income tax for sub-contractors which is eight-percent of gross Philippine tax; and for their foreign employees, 15-percent of gross Philippine tax.

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