Friday, 26 June 2009

Philippines to receive royalty from Galoc oil

Alena Mae S. Flores
Manila Standard
http://www.manilastandardtoday.com/?page=business3_june25_2009

THE government will receive this month its 60-percent share from the net revenues of the Galoc oil field off Palawan after the Energy Department declared its commercial viability.

Energy Secretary Angelo Reyes said Galoc Production Co., the operator of the Galoc field, would now proceed with commercial production after producing more than two million barrels of Palawan light crude since production tests started in October last year.

“Of course, this is only the start for future oil production in the country. This is a clear indication that the country is a viable investment location and we hope that this will entice future investors to set up their businesses here,” Reyes said.

Reyes ordered the termination of the extended production tests on June 19, the date from which the government’s share in the profits will be calculated.

The government is set to receive 60 percent of the net revenues, which refer to total revenues less the 70-percent cost-recovery granted to Galoc Production.

The Galoc field produced 20,000 barrels a day in the first 90 days of commercial production before eventually stabilizing to around 12,000 to 14,000 barrels per day.

The Energy Department said that once production has stabilized, flow testing will be undertaken over the coming weeks. Galoc oil production is expected to meet 6 percent of the country’s daily oil demand.

Galoc Production has already sold seven shipments to Korea, Japan and Thailand. It also sold 300,000 barrels to Petron Corp., the country’s largest oil refiner.

The field is estimated to contain 10 million barrels of recoverable oil reserves. But Singapore’s Gaffney and Cline Associates, which conducted its own assessment, reported that the field could contain up to 49 million barrels.

Galoc Production, which owns 58.29 percent in the consortium, is composed of the Vitol Group (68.6 percent), an international oil company, and Otto Energy Ltd. of Australia (31.4 percent).

Other members of the consortium are Australian firm Nido Petroleum Ltd. with 22.8 percent, Oriental Petroleum and Minerals Corp. (7.57 percent), The Philodrill Corp. (7.03 percent), UK firm Forum Energy Philippines Corp. (2.27 percent), Alcorn Gold Resources Corp. (1.53 percent), and PetroEnergy Resources Corp. (1.03 percent).

Galoc Production said the data obtained during the extended production test has “proved invaluable in providing sufficient confidence in reservoir performance to justify commencement of long-term production.”

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