President Rodrigo Duterte has signed an executive order that approves of third party participation in exploring, developing, and utilizing the country’s energy resources such as oil and gas.
It will allow the Philippine National Oil Co.-Exploration Corp. (PNOC-EC) to enter farm-in/farm-out agreements in which third parties can participate through the SC awarded by the government to PNOC-EC.
This will mean that the pending farm-in deal with China National Offshore Oil Corp. (CNOOC) in Calamian northwest Palawan will finally push through.
“In all cases, PNOC-EC shall enter into farm-in/farm-out agreements with reputable, technically competent and financially capable entities,” read the newly signed EO, as reported by the BusinessMirror.
As stated under the farm-in/farm-out policy, third party participation is allowed to spread the ingrained risks in oil and gas exploration, development, and production.
“Farm-in” transaction is the entity acquiring the participating interest, while “farm-out” is the entity transferring the said interest.
Mandated in the new EO, the Department of Energy will issue rules and regulations with Governance Commission for government-owned or -controlled corporations (GCG), to specify the selection process to be done by PNOC-EC.
DOE is responsible for approving the farm-in/farm-out agreements with PNOC-EC.
In addition, the DOE shall also submit regular reports to the President on the implementation of EO 80.
The DOE awarded the contract to PNOC-EC with CNOOC to conduct petroleum exploration on September 15, 2005. PNOC-EC has already sealed a partnership with CNOOC and Jadestone Energy Inc. when EO 556 was issued in 2006.
CNOOC was reported to hold more than half of the shares at 51 percent; PNOC-EC at 28 percent; and Jadestone at 21 percent.
The Philippines and China entered an agreement on joint oil and gas development in the West Philippine Sea in November last year.