This block comprises a portion of the Sandakan Basin and contains four previously drilled wells and 5200 km of seismic lines. Several International Oil Companies including Arco and Occidental have studied the area in the early seventies and concluded that the area is oil and gas prone. Petroleum system in the Sandakan basin has been proven and presence of reservoir quality sandstones has been confirmed by well log, core data and petro-graphic analysis.
The Philippine Service Contract contains certain terms which are favorable toward the contractors, among others:-
The SC provides for a Production Period which is 25 years, extendable up to a maximum of 50 years.
The exploration period is for 7 years consisting of 6 sub-phases, commencing on the date of signing of the SC and is extendable for another 3 years. If commercial discovery is made, the Production Period is for 25 years.
Contractors shall commence Petroleum Operations not later than six months after the Effective Date. Within the first 6 months, Contractors are obligated to conduct a geological and geophysical study of the area costing approximately US $50,000. Within the next 18 months, the Contractors will have to acquire, process and interpret 2200 km of 2D seismic costing approximately US $1,600,000. The total firm commitment for the first sub-phase (6 months + 18 months) is approximately US $1,650,000.
The various payments of bonus by the Contractors to the Philippines Government, at the respective stages are as follows:-
The SC can be terminated by the Contractors at the end at each sub-phase of the Exploration Period.
If during the Production Period, the Contractors fail to continue production of Petroleum in the Contract Area for more than 1 year without the approval of the Philippines Government, then the Philippines Government may unilaterally terminate the SC.
The Contractors may assign part or all of its rights and/or obligations under the SC to its affiliate with prior notice to the Philippines Government, subject to any procedures and guidelines issued or to be issued by the Philippines Government. The assignment shall be effective subject to:-
The SC is in line with Ranhill's strategic plan to increase the Energy Division's revenue, and to enhance its profile within the oil and gas industry.
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