Philippine Oil and Natural Gas Reserves

The Philippine has recently become the focus of attention when areas off its shelf have been found to contain vast amounts of natural gas deposits. Natural gas is one of the cleanest sources of energy from fossil fuels. It is composed mostly of methane and is considered to be one of the most useful and safest energy sources. The country also boasts of oil deposits though production is not substantial to support local demand.

Natural gas is one of the most abundant hydrocarbons in the South China Sea where the Philippines lies closely. No wonder this part of Asia is home to some of the biggest natural gas resources in the region.

Most of the countries in Southeast Asia such as Malaysia, Thailand and the Philippines have vast natural gas reserves. There were even rumors that the Spratlys Islands, an area of great controversy among the surrounding countries just off the tip of the South China sea, lies over a natural gas and oil-rich ground but this has remain unfounded due to the absence of any commercial drilling in the area.

Based on the Department of Energy (DOE Philippines) data, by the end of 2005, the country has total petroleum reserves of 456 million barrels of Fuel Equivalent (BFOE). This figure is composed of 25 million barrels of oil, 2,136 Bcf of natural gas and 54 million barrels of condensate. The country consumed 299 thousand barrels of oil a day in 2007 while oil production for the same year is at 336 thousand barrels a day.

According to the Oil and Gas Journal report, the Philippines holds an estimated 3.48 trillion cubic feet (Cbf) of national gas reserve as of 2008, majority of which is concentrated in the Malampaya offshore field. On one hand, the CIA World Fact Book, estimates natural gas proved reserves of the Philippines at 98.54 billion cubic m in 2009 while gas consumption was at 2.94 billion cubic m by 2008 estimates.

The Philippines does not have a significant oil production history but this landscape has changed with the discovery of new offshore or deep sea oil deposits in the Malapaya field in 1990 by Shell Philippines. The Malampaya Oil rim is deemed to hold the country’s largest oil reserve. This oil-rich deposit lies under the field’s natural gas deposits. Shell Philippines obtained full ownership of Service Contract 38 (SC38) and made one of the largest investments in the country’s gas industry by laying a 504-kilometer pipeline and establishing a gas facility in the Batangas province. The Malampaya field has supplied clean fuel to the Luzon grid since 2002 by virtue of the government-initiated Malampaya Gas-to-Power project supplying three combine cycle gas turbines. The Malampaya field has over 28 service contracts as of 2007. Its discovery paved the way for the government’s Natural Vehicle Program for Public Transport (NGVPPT).

With estimated 3.5 to 5 Tcf of natural gas, the Sampaguita field is being considered as another possible source of natural gas in the country. Forum Energy plans to conduct test drills in the area to confirm the natural gas reserves and the viability of a liquefied natural gas project (LNG) in the future.

The field located 60 km northwest of Palawan has an estimated oil reserve of 10 million barrels and has produced over 5.4 million barrels by June of this year, or half of its reserves. Australian firm Otto Energy Ltd. I is part of the joint venture operating the Galoc Oil fields and holds a 31.38% stake in Galoc Production Co. (GPC). GPC operates the oil field under SC14-C. The daily production rate of the oil field has declined from 11,000 barrels per day (bpd) to 8.750 bpd. The Galoc Oil field went onstream in 2008.

The Philippines offer many incentives to petroleum service contractors under the Oil and Development Act of 1972 or Presidential Decree 87. The Business Monitor International’s (BMI) Philippine Oil and Gas report latest forecast poised the Philippines as petroleum supplier of 0.76% while accounting for 1.11% of Asia Pacific’s regional oil demand by the year 2014. Though the Philippines is predicted to suffer a slight decline in oil production in the years ahead, positive growth is expected in the natural gas industry mainly attributed to the cooperative efforts of the Philippine government and collaboration with noted international players. With the Philippines currently ranked as the 7^th in the Downstream Business Environment ratings, the future indeed looks bright for the Philippine natural gas sector.

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