Intl Consortium Secures Philippine Contract for Oil Hunt

North East Palwan
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MANILA, Jan 27, 2006 (Dow Jones Commodities News via Comtex)

South China Resources Inc. (SOC.PH), a Philippine-listed oil exploration company, said Friday that it has joined an international consortium that had secured a contract from the government to explore for oil and natural gas in an offshore area in southern Philippines.

With Shell Philippines Exploration B.V., or SPEX, and Kuwait Foreign Petroleum Exploration Co. Philippines (Onshore) B.V., or KUFPEC, South China Resources has signed a seven-year service contract that requires the consortium to invest a minimum of PHP1.27 billion ($24 million) to conduct seismic surveys and explore a 1.01-million-hectare site in Northeast Palawan.

Service Contract 60 gives the consortium the option to do exploratory drilling within the seven-year period, and in case of commercial discovery, to upgrade the contract to a 25-year production agreement.

SPEX has a 55% stake in the consortium, KUFPEC holds 30%, while South China Resources owns 15%.

SPEX is the operator of the Malampaya natural gas field, while KUFPEC is a wholly-owned subsidiary of Kuwait Petroleum Corp. (KPT.YY).

The signing Friday of the new service contract is the 14th to be inked by the Philippine government since December 2004. These service contracts involve total investments of $193 million.

Soaring world oil prices have rekindled oil and natural gas exploration in the Philippines, where most of the major discoveries are located offshore and in deep waters.

Copyright (c) 2006 Dow Jones & Company, Inc.

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