THE Department of Energy (DOE) and the Philippine National Oil Company -Exploration Corporation (PNOC-EC) are urging the judiciary to help push for the expansion of indigenous energy explorations to secure the country’s future energy supply.
In a recent virtual forum organized by the Joint Foreign Chambers of the Philippines, the DOE and the PNOC-EC clamored for the immediate resolution by the Supreme Court of legal challenges pertaining to the expansion of upstream explorations.
“We have to re-emphasize that everything goes together: legal, executive and judicial. We are pushing for the expansion of exploration areas. We are making it more attractive to investors. At the end of the day, the judiciary will be the judge,” said DOE Undersecretary Felix William B. Fuentebella.
PNOC-EC President Lt. Gen. Rozzano Briguez commented that legal challenges hamper the expansion of indigenous energy exploration projects. “We are looking at a very good prospect. What is preventing us are legal aspects with our laws and regulations.”
Gas supply from the Malampaya Deepwater Gas-to-Power Project (Malampaya) is not enough to fuel the future requirements of the country. The government has since been inviting investors to conduct oil and gas exploration activities.
Investor reluctance to do exploration activities is seen rooted in the pending case of the Malampaya consortium with the SC for the income taxes questioned by the Commission on Audit (COA).
The COA had overruled the Malampaya consortium’s petition claiming that income tax was already imputed in the government’s 60-percent share in the Malampaya royalties. The tax, said the consortium, should be deducted from the government’s share of the Malampaya earnings.
Interpretations clash between the COA and the Malampaya consortium with regards to Presidential Decree (PD) 87, or the law that governs the contract between the government and the Malampaya gas project.
The COA had mandated DOE to collect P53.14 billion in unpaid taxes from contractors of the Malampaya . COA maintained there is no provision in the law saying the income tax of the contractors forms part of the share of the government.
Nonetheless, the DOE is doing its part to lure in investors. Fuentebella said the agency has the mandate to explore more energy options for the country for more indigenous energy resources, as well as imported ones like liquefied natural gas (LNG). It can nominate areas for exploration within the country’s jurisdiction subject to the legislative body’s approval.
“We have to tell the judiciary that exploration is also important. The Constitution tells us to explore and develop our own indigenous sources. We need to utilize all our resources as well. The way forward is to develop all options,” said Fuentebella.
Meanwhile, Briguez emphasized the importance of drilling and developing the Philippines’s own indigenous resources. Drilling would allow the country to discover the richness of its natural resources and amplify data collection.
“While we are waiting for the depletion of Malampaya, Malaysia has already discovered seven times more just by drilling. The most important is to make the investment climate to make the operational data enticing. We need a good grasp of prospectivity so that investors will know,” Briguez pointed out.
Malampaya, he noted, has always been cited as a model for shaping the future share of natural gas in the country’s energy mix. It is the pioneer in the country’s natural gas industry.
The DOE official, meanwhile, stressed that Malampaya has become a model for best practices in PPPs through the collaboration between the government and the private sector and has shown the way for the government and the public sector to work together for a clean energy scenario. “It’s really a long-term process, but we believe the DOE has planted the seeds. We have provided a good legacy for the future administration,” said Fuentebella.
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