Friday, October 10, 2008

Oil Production Off Palawan Island

The Philippines enters the list of oil producing country. With its first oil extracts off Palawan Island, the country is geared towards energy self-sufficiency in the near future. The oil produce will signal more oil exploration in the Philippines and a renewed interest in the adjacent Spratly areas.


The Galoc oilfields in Palawan started producing oil with “light medium crude oil with a potential high yield of light ends such as gasoline” as announced over the radio by Executive Secretary Eduardo Ermita at around 11:00 A.M., Thursday. GMA 7 continuously flashed the oil extract report with gleaming hope of economic upliftment in terms of energy requirement. The Galoc oilfield was discovered with the drilling of Galoc-1 in April 1981 by the Philippines Cities Service Company, but site developments were done only in 2005 when Galoc Production Company WLL farmed the area with its partners: the Otto Energy, Philodrill Corp. and Nido Petroleum Ltd. Galoc-2 was drilled by Occidental Petroleum Company in 1983.


In addition to Galoc oil we also produced liquified petroleum gas in the Malampaya well located 80 kilometers off the coast of Palawan Island. Oil at Malampaya well can also be produced as evidenced by the extraction of 1.88 million barrels of oil during the extended well test with a maximum oil production rate of 25,100 barrels per day. Executive Order No. 473 was issued by President Gloria Macapagal-Arroyo on November 29, 2005, to develop oil from Camago-Malampaya reservoir which prompted the Department of Energy to coordinate with the contracting party in the safe development of oil and gas projects. As Ermita said from “The President is optimistic that this new development will positively impact on the administration’s efforts to reduce the country’s annual oil importation of $6 billion, and in turn will also contain the increasing cost of food and other commodities.” However, the Galoc oil missed the all-time record high of $147.27 per barrel price of July 11 which the operator had been anticipating and catch up with all-time low of $78 per barrel.


With the oil development in the offshore of Palawan Island, more oil exploration will be encouraged in the area particularly the Spratly group of islands. It is worthwhile to mention that Spratly Islands are being claimed by the Philippines, Vietnam, Taiwan, China, Malaysia, and Brunei. It is believed that the continental shelf of Spratly is a reservoir of billions of tons of oil reserve and gas deposits. The Philippines, with its failure to pass a law relative to the archipelagic baseline requirement of the United Nation Convention on Laws of the Sea which is to expire on May 13, 2009, may lost our right on the portion of Spratly which is within our continental backyard.

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