Shell-led group to start drilling in the Philippines

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, June 2 -- Shell Philippines Exploration BV and its partners Kuwait Foreign Petroleum (Kufpec) and South China Resources Ltd. (SCR) will start drilling activities at their Service Contract 60 (SC 60) in Northeast Palawan.

The partners have commissioned the services of the Frontier Phoenix drillship for oil and gas exploration in SC 60, according to filing by SCR with the Philippine Stock Exchange (PSE).

David Baladad, SCR vice-president of operations, told PSE that the drillship will proceed to Northeast Palawan later this year upon completion of its 5-well program in Malaysia.

SC 60 is one of the country's most promising areas in terms of potential for large accumulations for petroleum, according to SCR, which said that a rigorous study of the 3D seismic data was conducted and highlighted a number of leads, several of which have been elevated to "prospect status."

"The objective is to continue and further the exploration of the block with a commitment to drill one well during the subphase," SCR said, adding that the second subphase is valid until Feb. 10, 2010.

The consortium partners signed their agreement for SC 60 in 2005. Under terms of their 7-year agreement, the consortium committed a minimum of $24 million (1.27 billion pesos) for the project.

According to the agreement, the consortium is to conduct seismic and exploration work to find petroleum and optional exploration drilling within the first 7 years. SC 60 also includes a 25-year production term in the event of a commercial discovery of petroleum.

The SC 60 partnership is comprised of Shell 55%, Kufpec 30%, and SCR 15%.

Contact Eric Watkins at hippalus@yahoo.com.