Estrada confirms oil find in Malampaya off Palawan

It's not just gas.

The Malampaya wells off Palawan in the South China Sea do not only contain trillions of gallons of natural gas but crude oil as well.

President Estrada announced this yesterday as he bared that the recent discovery of oil in the Malampaya area would reduce the country's oil import requirements two years from now.

"This additional discovery will be another boost to the government's continuing drive towards greater energy self reliance," he said.

Officials of the Shell Philippines Exploration (SPEX), which is developing the Malampaya wells, met with the President yesterday to disclose their recent findings.

Accompanied by Energy Secretary Mario Tiaoqui, SPEX officials led by Pilipinas Shell president Oscar Reyes told the President that they recently found 200 million barrels of oil in Malampaya, 30 million of which are considered "recoverable."

"This new oil find could translate to an initial production of 20,000 to 25,000 barrels per day by mid-2001 and a potential of 50,000 barrels per day by 2003," the President said.

"This is equivalent to approximately 15 percent of the country's crude imports in 1999," he added.

The President was told that the oil sample from Malampaya was a light crude and similar to that found in Nido, Palawan.

It was explained to him, however, that quantity of the oil reserves in Malampaya can only be declared as commercially viable once data gathered from the wells were fully analyzed.

SPEX officials have drilled five wells in Malampaya and would soon lay underwater pipes to bring natural gas to Luzon.

Rights to develop Malampaya, discovered in 1998 about 70 kilometers west of Palawan, were bought by SPEX.

Since it was appraised in 1994, the site had been drilled five times, with the latest drill -- Malampaya 5 -- reaching more than 3,000 meters deep.

David Greer, managing director of SPEX, said strong gases had been observed to be coming out of the wells.

"The Malampaya project is a landmark and trailblazing project that shall give birth to the Philippines' natural gas industry. With successful wells, gas will soon flow for the benefit of the nation," he said.

The project costs about $4.5 billion, making it the largest single investment in the country's history. The wells, offshore platform and the 504-kilometer underwater pipeline and the onshore gas plant themselves already cost $2 billion.

SPEX is working with Texas Oil Co. (Texaco) and the Philippine National Oil Co. in developing the project.

The first gas from Malampaya is expected to flow through the pipes in October 2001. The gas would be bought by power plants which in the past relied only on petroleum.

And Greer believes that with cheaper and cleaner fuel, these power plants may save on cost, thus lower their selling rates.

"These power plants shall provide 30 percent of Luzon island's power requirement by 2002," he explained.

Meanwhile, Tiaoqui said he could not still say if the oil find in Malampaya would lead to lower petroleum prices in the country.

"We still have to look at it closely in terms of what the additional investment and operating cost requirements would be," he said.

Fuel prices in the country had risen dramatically in the past months due to the rising rates of crude oil abroad.

The country still relies heavily on imported crude oil which is being refined by major companies such as Shell, Petron and Caltex locally.