By Upstream staff
Philippine National Oil Company’s upstream arm PNOC Exploration Corporation (PNOC-EC) has estimated it would cost around $1 billion to develop the Malampaya oil rim, a thin layer of oil at the bottom of the Malampaya gas field, PNOC-EC president Rafael Del Pilar said.
The oil rim’s development would involve a capital expenditure of around $500 million and an operational expense of around $400 million, Del Pilar told local media.
PNOC-EC would raise a portion of the development cost through proceeds from its share offering scheduled for February next year, Del Pilar said.
Del Pilar added that PNOC-EC is still waiting to hear from Philippine Energy Secretary Angelo Reyes to firm the set-up for the development of the oil rim.
PNOC-EC selected Malaysia-based Mitra Energy last June to develop the rim, but the deal was later scuttled by Philippine President Gloria Macapagal Arroyo, after questions were raised over PNOC-EC’s selection procedure.
The Philippine company was believed not to have followed an open bidding process and has since been reworking the bid terms.
PNOC-EC has presented Reyes with several options including allowing the Malampaya operators Shell and Chevron to revisit the oil rim’s development, Del Pilar said.
After trying to develop the oil rim for around 15 years, Shell in 2004 halted work saying the project was not viable.
Shell has a 45% operating interest in the Malampaya gas project together with Chevron (45%) and PNOC-EC (10%).
The other options are for PNOC-EC to develop the project alone or to bring in a strategic partner, Del Pilar said.
Mitra had earlier estimated the oil rim to hold between 30 million and 45 million barrels of recoverable oil reserves and had pegged the total project cost at $700 million.
31 October 2007 06:31 GMT | last updated: 31 October 2007 06:38 GMT