|
THE
government could lose control over the proceeds and
development of the oil and gas prospects along the Reed
Bank, should it proceed to explore and develop the block
with its tripartite partners China and Vietnam instead
of allowing a British-based petroleum player to proceed
with its work in the area.
“The
government will be left with only a third of what it
could earn from the proceeds of developing and
extracting oil from the Reed Bank should our geophysical
survey and exploration contract [GSEC 101] not be
converted into a service contract,” Jose Raymund Apostol,
president of Forum Energy Philippines Corp., told
reporters in a press conference.
Earlier
reports noted a looming conflict in converting the GSEC
101 of the UK’s Forum Energy Plc. on the Sampaguita oil
and gas discovery in the Reed Bank basin, which is
within the “conflict area” of the South China Sea and
covered by oil and gas explorations currently being
undertaken by the Philippine National Oil Corp., China
National Offshore Oil Corp., and PetroVietnam.
The
Forum Energy official said his company is financially
and technically capable of completing the work program
his company has envisioned for the Reed Bank, in view of
reports quoting Energy Undersecretary Guillermo Balce as
saying that the company has yet to document its
financial capability.
He
hinted at the option of suing the Philippine government
if the contract is taken away from them: “We cannot do
anything, as we are just waiting for whatever the
government will say, but remember that Forum is a
UK-listed company, and we all know that legally, the
license is ours. And if it turns out unfavorable to
Forum, definitely we will not take it sitting down and
will have to refer it to our legal counsel, as it cannot
be taken from us easily,” Apostol said.
Apostol
said they had submitted as early as August last year the
documents that show not just their financial capability,
but also their technical capability.
The
issue of financial and technical capability is usually
raised against a company before it is awarded a contract
with the Philippine government. Once a company becomes a
registered contractor for the government—as Forum Energy
is—the next thing it is required to do is to perform and
deliver the commitments made in a contract, noted
Apostol.
Based on
Forum Energy’s study, according to Apostol, the project
will entail their spending $100 million to set up
several drilling wells and around $15 million to $20
million to commission drilling rigs.
Apostol
said that Forum Energy, with its parent company publicly
listed at the London Stock Exchange, has already raised
$20 million from investors.
“While
the DOE [Department of Energy] could be saying all over
the press that we need to show our financial capability,
apart from the internally generated funds, we also plan
to tap financial institutions,” he said.
“When we
are ready to drill, money will pour in quickly as people
will find out about the feasibility of the project.
Usually, when you drill a well and prove to have
recoverable reserves, it is not difficult to raise
subsequent funds,” said the Forum Energy official.
Apostol
said they have already spent more than $5 million in
exploring 1.036 million hectares offshore of the Reed
Bank.
He hopes
the government would consider the length of the
company’s presence and investments in the Reed Bank.
Forum
Energy chief executive Russel Harvey earlier told
shareholders of the “political sensitivities” of the
Sampaguita gas discovery, and yet affirmed the company’s
target to secure an approval on its application for a
service contract from the Philippine DOE.
The
three-dimensional seismic survey on the Sampaguita gas
prospect reveals the reserve could hit 3.4 trillion
cubic feet (TCF) gas-in-place with upside reaching 20
trillion cubic feet—an acreage that could be comparable
or even surpass the Malampaya’s potential. |
