DOE contemplating Ayala’s SC55 force majeure request


Due to the huge impact of the COVID-19 pandemic on the upstream oil industry, the Department of Energy (DOE) is evaluating a request to place Service Contract (SC) 55 off the southwestern coast of Palawan under force majeure. 

Based on a report from The Philippine Star, the SC55 consortium requested last year that the DOE declare a one-year suspension on the project. 

Ayala-led ACE Enexor Inc. said the request was due to the far-reaching adverse effects of the pandemic, which resulted in low oil price on the global upstream petroleum industry. 

Under the Civil Code of the Philippines, declaring a force majeure would mean suspending the operation of the contract, which excuses a party from its contractual obligations in circumstance of a fortuitous event such as natural calamities. 

Energy Asec. Leonido Pulido III said officials are about to wrap up their evaluation of the request. Until then, well planning and drilling operations for SC55 remain ongoing.

Back in February, ACE Enexor said it aims to concretize its partnership and drilling plan for SC55 within the first half of the year ahead of the targeted drilling of an appraisal well within the first half of next year.

Last year, ACE Enexor subsidiary Palawan55 Exploration & Production Corporation — SC55’s operator — committed to drill an exploratory well within the first two years, right after receiving DOE’s confirmation on its entry into the appraisal period. 

In April last year, the DOE said the Hawkeye-1 well within the SC55 block encountered a significant volume of movable natural gas deemed to be a non-associated gas discovery, estimated at 2.2 trillion cubic feet.

Under Section 13.02 of SC55, non-associated gas discovery means the reservoir has natural gas, but has no oil.

The Hawkeye well was particularly believed to have some 480 million barrels of oil identified on 2D seismic when it was originally acquired by Australian firm Otto Energy in 2007, and was further defined with the 3D seismic acquisition in late 2009.