Foreign investors rush for Philippine contracts

The Philippines said yesterday at least 48 foreign and local firms expressed interest in exploring for gas and oil despite the political uncertainty from a failed troop mutiny last month and an election due by next May.

"It's very heartening that the more recent event that happened in Manila has not affected their decision to come," Energy Undersecretary Eduardo Manalac said after the government opened bidding for the exploration contracts.

The 46 contract areas cover shallow to deep water sites close to the existing Malampaya natural gas field, as well as other oil-producing fields near the island of Palawan, in the Sulu Sea and in the Reed Bank.

Bids can be submitted until March 2, with the winners to be announced in May, Manalac said.

The Philippines said contractors could recover exploration and development costs from 70 per cent of gross proceeds. They will get a maximum of 40 per cent of the net proceeds, with 60 per cent going to the government.

The contractors also will not have to pay national taxes.

The Philippines now produces up to 260 million cubic feet of natural gas per day, but its crude output is minuscule at just 500 to 600 barrels per day.

Despite Manalac's optimism, it is not yet clear how many of the 48 companies that sent representatives to yesterday's session will actually submit bids.

Local media have been speculating that foreign investors, in particular, are worried about policy continuity if they sign new contracts before an election just eight months away.

President Gloria Macapagal Arroyo insists she will not run in May, but opinion is split on whether she will reverse course.

"The new acreage, the new data and the terms are okay so we came to have a look," Paul Carroll, section leader in Southeast Asia for Australia's BHP Billiton Petroleum told reporters.

Asked if he thought investors would find a discovery equal to the size of the Malampaya gas field, he said: "Somebody will".

The $4.5 billion Malampaya project, the country's biggest investment, has reserves of 2.7 trillion cubic feet of gas and 85 million barrels of condensate.

Royal/Dutch Shell group and U.S.-based Chevron Texaco each have a 45 per cent stake in Malampaya, with the government holding the remaining 10 per cent.

Patrick Bouisset, geosciencies manager of Total E&P, said his company remained confident about long-term prospects in the Philippines. Total E&P is a unit of France's Total, which operates gas stations in the Philippines.

"We think the area is interesting for exploration so we would like to have a look at these data to make a new interpretation," Bouisset said.

He said the contract terms offered by the Philippines were better than other countries such as Malaysia.