In line with the government’s goal to attain energy independence, President Duterte has allowed the Philippine National Oil Co.-Exploration Corp. to forge farm-in and farm-out agreements with third parties for oil and gas exploration and development in the country.
The President has issued Executive Order No. 80 that rationalizes the rules for the engagement of third party participants under petroleum service contracts.
The rules included a provision directing the PNOC-EC to enter into such contacts only with reputable and competent entities subject to the approval of the Department of Energy.
The President’s latest order, signed last May 28, repealed Executive Oder No. 556 issued by then President now House Speaker Gloria Arroyo in 2006 that prohibits farm-in and farm-out contracts awarded by PNOC for oil exploration in the Camago-Malampaya Reservoir.
The Energy department earlier pushed for the amendment of EO 556 issued during the Arroyo administration to facilitate the joint exploration deals, including Service Contract No. 57 with China, on oil exploration in Calamian, Palawan.
“It is the aim of the government to achieve energy independence for the Filipino people by, among others, enhancing the country’s competitiveness as oil and gas investment destination through the adoption of industry practices,” Duterte said in EO 80.
“The exploration, development, and utilization of energy resources such as oil and gas are capital-intensive activities, and farm-in/farm-out agreements, by distributing the risks and financial burden among several industry players, facilitate the undertaking of such activities,” it added.
Under EO 80, the PNOC-EC will be permitted to enter into farm-in/farm-out agreements through which: (a) third parties can participate in service contracts awarded by the government to the PNOC-EC, and (b) PNOC-EC can participate in the service contracts awarded by the government to third parties.
“In all cases, PNOC-EC shall enter into such agreements only with reputable, technically competent, and financially capable entities,” Duterte said.
The PNOC-EC, the upstream oil and gas subsidiary of the PNOC, participates in petroleum service contracts either as an operator or non-operating partner. (Genalyn Kabiling)