Australian firm Otto Energy Ltd began drilling for oil at the Duhat-2 exploration well, a site located northwest of Leyte. The process is expected to take place for 31 days. Duhat-2, which is covered by oil and gas exploration and development service contract (SC) 51, is estimated to contain a mean prospective resource oil volume of 34 million barrels of oil with a range of 1-88 million barrels of oil. Otto Energy is also part of the consortium that operates the Galoc field, which is the Philippines’ only commercially producing oil field.
The latest venture of Otto Energy Ltd is very timely and significant for the oil industry, as well as for the whole country. In 2012, actual crudes and petroleum products closing inventory for the month of December was reported at 13, 085 thousand barrels (MB)
while the country’s total demand of finished petroleum products was 110, 991 MB. This is equivalent to an average daily requirement of 303.3 MB
. Since there is not much upstream activity in the Philippines, the local supply of oil pales in comparison to the growing demand for the commodity. Because of this, a significant portion of the supply of oil is sourced from abroad, making local oil prices vulnerable to external shocks and conflicts. Oil extraction in the country only currently takes place in the Galoc oil field located in Palawan. Upstream activity refers to the drilling and exploration, while downstream activity pertains to refining and distribution.
The Duhat-2 exploration well, thus, is one step towards making the country less dependent on oil imports. The oil that can be extracted from the site can augment oil supply in order to satisfy local demand. Though the Philippines is still far from being self-sufficient when it comes to oil, the Duhat-2 exploration well provides a positive outlook that oil reservoirs can be possibly discovered in the different parts of the country, if only advancements in oil exploration would be given priority. If oil explorations turn out to be successful, then the country can enjoy low prices in oil and will no longer need to import oil.
German de la Paz III