Philippine Govt: Need Public Bids for Malampaya Oil Project

Dow Jones Newswires

MANILA Aug 29, 2006 (Dow Jones Newswires)

Philipine Energy Secretary Raphael Lotilla Tuesday defended an order by President Gloria Macapagal Arroyo requiring public bidding for the development of an oil reserve at Malampaya, the country's largest natural gas field.

Lotilla said Executive Order 556 embodies the government's "policy to promote a competitive and transparent process" for selecting a joint venture partner for state-owned Philippine National Oil Co. in the project.

EO 556 has been criticized, as it effectively cancels the selection by PNOC of Malaysia-based oil and gas exploration company Mitra Energy Ltd. as its partner for the development of the Malampaya oil reserve. PNOC said in June it chose Mitra Energy over seven others because Mitra Energy envisions production of oil by the end of 2007.

Lotilla said, however, that PNOC hasn't awarded any contract regarding the Malampaya oil development.

"Whether the current process undertaken by PNOC over the Malampaya oil conforms to the requirement of a competitive process is a factual issue that will be determined once PNOC gives a formal report," Lotilla said.

Mitra, which already has exploration projects in the Philippines and Indonesia, had initially estimated that Malampaya may yield a total 41 million barrels of oil over four years. It said the total project cost is $684 million.

Mitra and PNOC are already partners in the Calamian oil exploration project in the Philippines.

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