ILOILO CITY - A Malaysian oil exploration firm and the Philippine National Oil Company Exploration Corp. will start drilling operations next month to confirm oil deposits estimated to reach 160 million barrels off the coast of Culasi town in Antique.

If confirmed, the oil deposits would be the biggest in the country, outgoing Energy Secretary Raphael Lotilla said.

"We are hoping for positive results. This will mean a lot to energy independence of the country," Lotilla said in a telephone interview.

Lotilla said the government has contracted the Malaysian-owned Petronas Carigali Overseas Sdn Bhd to drill exploration wells at an area located 12 km south of Maniguin Island in Culasi town, around 61 km north of the capital town of San Jose. The site is 58 km from Boracay Island and 260 km from Batangas. The area is part of the exploration site of PNOCEC and PCOSB covering 14,667 sq km east and south of Mindoro Island and west of Panay Island. It is considered one of the most attractive exploration areas situated in the same geologic region of northwest Palawan where the Malampaya natural gas reserves are located.

Lotilla said the drilling of an exploration well reaching 140 meters underwater will start on the third week of August and is expected to last for a month. He said more wells will be drilled if the operation would yield positive results.

The drilling of one well is estimated to cost around $20 million, Raymundo Savella, PNOCEC exploration manager, said.

The whole exploration operation will last for seven years at the maximum, depending on the results of the digging of wells, sample analyses and studies.

The first phase reaching from one to two years involves the drilling of one well and acquiring data. If there are positive results, the operation will proceed to the second phase also expected to last for two years and involves the drilling of another well and getting more data.

The last phase expected to last for three years involves the drilling of two more wells Savella said the exploration will be called off at any of the phases the of results will not confirm a significant volume of oil deposits.

The exploration contract is extendible for three years if needed. The development and production period covers 25 years and is renewable for a series of five-year periods but shall not exceed 15 years.

Exploration and sampling had been done on the area since more than a decade ago by various exploration firms but the data gathered showed a small volume of potential oil reserves.

But Savella said recent studies showed a large volume of oil reserves.

Data taken at the site off Maniguin Island confirmed the presence of high quality petroleum source rocks capable of generating large amount of oil. The source is considered one of the richest in Southeast Asia, according to PNOCEC data.

Savella said the exploration to confirm the potential oil reserves could not start earlier because they had to look for investors that would undertake the exploration which could cost $80 million.

Lotilla said that if the reserves are confirmed, 60 percent of the net proceeds will go to the government while the service contractor will get 40 percent. Of the 60 percent share of the government, 40 percent will go to the local government unit and the remaining share to the national government.

Antique Gov. Salvacion Zaldivar-Perez said they are hopeful that the results of the exploration will be positive.

"We are crossing our fingers. This will a big help to our economy," Perez said in a telephone interview.*NPB

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