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BHP, Shell eye stake in Philippine oil, gas project

Reuters

Thu Nov 13, 2008 5:03am EST

MANILA, Nov 13 (Reuters) – BHP Billiton (BHP.AX: QuoteProfileResearchStock Buzz) (BLT.L: QuoteProfileResearch,Stock Buzz) and the Philippine unit of Royal Dutch Shell (RDSa.L: QuoteProfile,ResearchStock Buzz) both want to bid for a 20 percent stake the government is selling in an oil and gas exploration project, a senior state official said on Thursday.

State-owned Philippine National Oil Co-Exploration Corp (PNOC-EC) (PEC.PS:QuoteProfileResearchStock Buzz) is selling part of its 50 percent interest in a project looking for oil and gas in the southwestern Palawan province.

But PNOC-EC’s joint venture partner, Australia-based Nido Petroleum (NDO.AX: QuoteProfileResearchStock Buzz), was also looking to sell part of its 50 percent stake in the exploration project and could unload up to 35 percent, PNOC-EC President Rafael del Pilar said.

“The new partner, if it wins both stakes, will have a controlling stake of 55 percent,” del Pilar told Reuters.

He said both Shell Philippines Exploration and BHP, the world’s biggest mining group, were also interested in Nido’s stake.

The project site is near the Camago-Malampaya gas field off the coast of Palawan, the Southeast Asian nation’s biggest hydrocarbon discovery supplying nearly all of its natural gas.

The Malampaya gas field is run by a consortium headed by a unit of Royal Dutch Shell.

Del Pilar said the company expects to hold the bidding later this month and award the contract in December or early January, adding that he is hopeful the project will be viable given its proximity to the Malampaya field.

“We expect the winning bidder to fund the drilling of two wells in exchange for the 20 percent (government) interest,” he said, adding that drilling one well normally costs between $25 million and $30 million.

Nido is part of the consortium behind the Galoc oilfield, the Philippines’ first major oilfield since the 1990s, which began producing crude oil in October.

Manila is pursuing oil exploration projects as it seeks to cut its dependence on costly imported fuel. It imports nearly all of its crude oil needs.

The government also said it has awarded a contract to PNOC-EC and a company controlled by San Miguel Corp (SMC.PS: QuoteProfile,ResearchStock Buzz) President Ramon Ang to jointly explore for coal in the southern Zamboanga province.

The two companies will initially invest a combined 150 million pesos ($3 million) to explore the area, which the government estimates contains 45 million tonnes of coal. ($1 = 49.495 pesos) (Reporting by Manolo Serapio Jr.; Editing by Michael Urquhart)

 

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