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MANILA, Philippines -- While the government has been busy engaging China in a tug-of-war over the Spratly Islands believed to hold vast petroleum resources, the largest proven oil deposit in the country to date remains undeveloped under its nose.
Eduardo V. Mañalac, former Philippine National Oil Co. president, said the oil resources beneath the Malampaya natural gas field or the Camago-Malampaya Oil Leg should be exploited to help reduce the country's oil imports.
Development of the proven resources has stalled for the past six years, steadily limiting the chances of maximizing the volume of oil that can be extracted, given various factors that make the highly complicated operation riskier and less cost-efficient as time goes by.
An international petroleum player tapped by the then PNOC management led by Mañalac failed to push through with the operation after a local company, relatively new in the industry, challenged the foreign firm, prompting then President Gloria Macapagal-Arroyo to stop PNOC from proceeding with the CMOL extraction. Burgundy Global Exploration Corp., the challenger, subsequently won its case in court, but did not move for six years, resulting in huge opportunity loss for the country.
"As far as I know, that accumulation, although small by world standards, is still the biggest oil accumulation or proven oil reserves in the Philippines," Mañalac told InterAksyon.com in an exclusive interview.
The country's transport sector consumes an estimated 300,000 barrels of oil per day while local production of the resource is placed at less than a fraction of this demand.
The CMOL, on the other hand, is estimated to hold between 25 million and 40 million barrels of proven oil reserves.
Besides boosting local supply, Mañalac said that at current oil prices of roughly $100 per barrel alone, the country would have generated $2.5 billion in gross proceeds from the conservative end of CMOL's projected reserves.
"Sa atin hindi pwede pabayaan ‘yan, kailangan makuha natin ang value niyan [We cannot afford to let that go; we must get that valuable resource]," he said.
The CMOL's development, however, continues to remain in the back burner because of state-owned Philippine National Oil Co.-Exploration Corp. failure to push through with the project. The latter is the oil and gas unit of PNOC.
The former PNOC official said that unless CMOL is developed soon, it could become "uneconomical" because the extraction of natural gas at the Malampaya above it could have a negative impact on the oil reserves.
"Pagkuha ng (When you take the) gas the pressure goes down, hindi na naturally mag-flow ‘yung oil pataas (the oil won’t naturally flow up), you'll need other equipment. Pag ginawa mo ‘yan, tataas (Once you do that, you get increase in) cost," he added.
The CMOL is located below the Malampaya's own reserves.
The country's largest natural gas field, the Malampaya is operated by Shell Philippines Exploration B.V. since 2001.
The rights to CMOL, however, were handed to PNOC-EC after Shell decided not to pursue the project.
PNOC-EC, however, has failed to develop the CMOL after the first partner it tapped for its development, Mitra Energy Ltd. of Malaysia, was challenged by local firm Burgundy Global Exploration Corp. citing the “Filipino First” policy of the Constitution before the Supreme Court.
While Burgundy, which sources said was close to the Arroyos, secured PNOC-EC's partnership in 2006 after the High Court sided with it, the Department of Energy recently canceled its contract for failure to develop the project.
"We cancelled because for the past six years we have not seen any development," Undersecretary Jose M. Layug, Jr. said.