Colossal Petroleum’s oil exploration bid nixed

By on January 7, 2019

THE Department of Energy (DoE) has formally rejected Colossal Petroleum Corp.’s proposal to explore oil and gas resources in two areas in Palawan province.

On the sidelines of a press conference in Taguig City, Energy Resource Development Bureau Director Ismael Ocampo said the department canceled the awarding of a petroleum service contract to the company as the latter’s bid “did not prosper” on account of a Commission on Audit (CoA) decision on a tax issue involving the group behind the Malampaya gas field.

In that 2019 decision, the commission found that the consortium operating that field in offshore Palawan — made up of Shell Philippines Exploration B.V., Chevron Malampaya LLC and state-run Philippine National Oil Co.-Exploration Corp. — had incurred a P53.14-billion tax liability, Manila Times reported.

Colossal Petroleum had submitted bids to explore East Palawan’s Area 5, which measures 576,000 hectares and has the potential to yield 1,897.4 million barrels of oil (MMBO) and 2,846.6 billion cubic feet of gas (BCFG); and Area 7 in Reed Bank, which spans 468,000 ha. and has the potential to yield 165 MMBO and 3,846 BCFG.

The oil company had been qualified to exploring these areas under 5th Philippine Energy Contracting Round, an old scheme of awarding service contracts for coal and petroleum exploration.

But in October, Energy Secretary Alfonso Cusi said that if the oil firm would no longer pursue its exploration plans, “we have no choice but to terminate it, because we cannot leave it hanging.”

He also said then that Colossal Petroleum was not willing to do what Israel’s Ratio Petroleum Ltd. did, which was accepting whatever the SC’s ruling on the Malampaya consortium’s petition to review the CoA’s order to pay the taxes incurred.

This resulted in the signing of a petroleum service contract between President Rodrigo Duterte and Ratio President and Chief Executive Officer Itay Raphael Tabibzada. Under this deal, Ratio Petroleum can explore oil and gas resources in the 416,000-hectare Area 4, or the East Palawan Basin.

Energy Undersecretary Donato Marcos explained that the DoE had given Colossal Petroleum an ultimatum to either disclose its plans to explore the area or abide with the High Court decision’s on the petition.

But that ultimatum, issued “about two to three months ago,” had already “lapsed,” effectively rejecting Colossal Petroleum’s bid, he said.

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