Nido pays government share in Tindalo oil output

MANILA, Philippines - Australian oil exploration firm Nido Petroleum Ltd. will start remitting royalties to the Philippine government after successfully drilling oil wells in Northwest Palawan.

In a report, Nido Petroleum, the lead operator of Service Contract 54A or the Tindalo oil field, said the conduct of extended well tests at the area was completed on Nov. 2. “As a result, future production from Tindalo will be subject to normal production sharing contract terms applicable in the Philippines,” it said.

Under Presidential Decree 87, all service contractors shall deduct from its gross income all operating and capital expense not exceeding 70 percent. The remaining 30 percent will be divided between the contractor (40 percent) and the government (60 percent).

Energy Undersecretary Ramon Oca said the completion of the extended well tests signals the start of government’s turn to collect royalties from the operators of the oil field.

“Government did not spend for this project and we will receive the share once the next production is sold,” Oca said.

In 2008, Nido Petroleum discovered the Tindalo oil field and decided to proceed with the well development in December 2009.

Nido Petroleum has a 42.4 percent stake in SC 54 A and is the project operator. Its joint venture partners are Kairiki Energy Ltd. (30.1 percent), TG World Energy Corp. (12.5 percent) and Trafigura Ventures III B.V. (15.1 percent).

Last month, the Tindalo field flowed some 9,000 barrels of fluid per day of which 50 percent accounts for water while the remaining 50 percent is crude oil.

The Tindalo well was producing a maximum flow of 16,000 to 18,000 barrels per day in July with the use of the submersible pump but production fell to around 2,000 barrels lately due to the presence of water.

The consortium has offloaded and delivered to South Korea its first crude oil cargo from the Tindalo oil field and will deliver over $14 million in gross revenue to the joint venture.

The Tindalo oil field is estimated to contain between 1.5 million to 9.1 million barrels with a mid-case of approximately 5.1 million barrels of oil.