DoE to replace contracting round system with Swiss challenge scheme

THE Department of Energy (DoE) has started asking private sector entities that are interested in exploring for oil, gas and coal resources to come out with their proposals under the new Philippine conventional energy contracting program.

“Even if tomorrow or next week let’s say a company is willing to do exploration work in certain identified areas, then okay, we will run it through a Swiss challenge,” DoE Secretary Alfonso G. Cusi told reporters.

He said the government wasted time under the previous system – the Philippine energy contracting round – and has set back energy exploration by about two years because of the lengthy interval between contracting rounds.

“Now anybody, any willing investor, can propose and say that I want to explore a particular area,” he said. “They determine the area that they want to explore.”

The new tack is departure from the DoE’s earlier pronouncement that a new contracting round is in the offing for petroleum and coal in its goal to create wealth for the industry to fund more energy development projects.

In July, the DoE’s energy resource development bureau (ERDB) said it planned to conduct a new contracting program by December to discover additional energy reserves.

The new round would have been the sixth Philippine energy contracting round, a system of awarding service contracts for petroleum and coal prospecting areas.

ERDB previously said it was hopeful that the new contracting program would discover another Malampaya, the offshore Palawan gas find that supplies a number of power generation plants in Batangas that deliver about 20% of the country’s electricity requirements. The government receives a portion of the revenue from the project.

The bureau said the areas to be offered under the new contracting program include parts of the West Philippine Sea, Sulu Sea and areas around Palawan province. In the fifth round the DoE offered 11 areas with a total area of about 4.8 million hectares.

Under the new program, the process will be faster as exploration companies need not wait for any declaration from the DoE to open any new contracting round.

“I will evaluate your offer, if it’s acceptable meeting the standard, I will publish it so the public will know then I’ll have it challenged to test that your bid is really fair and equitable to all parties,” Mr. Cusi said.

He also said the exploration arm of state-led Philippine National Oil Co. (PNOC) is not barred from coming up with proposals. – Victor V. Saulon