The Daily Tribune <<< Without Fear or Favor >>>

»HEADLINES

»NATION

Galoc oil flow delayed anew

07/15/2008

Another setback has delayed the first oil flow from the much-hyped Galoc oilfield, which President Arroyo said is among the answers to the country’s bid for fuel self-sufficiency.

Otto Energy, which leads the consortium extracting oil from the Galoc field, said the first oil flow is now likely in August, against an initial startup planned for the first quarter.

Otto Energy said the Floating Production Storage and Offloading system (FPSO) that is to extract 17,500 barrels per day from the offshore field has yet to be reconnected due to damage in one section of the riser.

The Galoc field is expected to increase the country’s oil output by 70 percent to slightly more than 40,000 barrels per day.

Aside from Otto Energy, Australia’s Nido Petroleum is a major partner in the project.

The FPSO was disconnected on June 20 ahead of the passage of Typhoon “Frank,” which wreaked havoc in central and southern Philippines.

A new section of the riser is being brought from Singapore and is expected to arrive this week, the company said.

“Otto will provide an update as to the anticipated timing for first oil once additional information is provided by GPC and Rubicon. However initial indications are, that it will now probably be during August,” the statement said.

This is the latest in a series of delays that has seen the field’s startup repeatedly postponed.

Oilfields’ startup dates are prone to repetitive slips while the infrastructure needed to extract and transport the oil is put in place.

Galoc will be Otto Energy’s first oilfield to come onstream.

Otto Energy holds an 18.3 percent indirect interest in the field via a 31.38 stake in operator Galoc Production Co. (GPC), with European trader Vitol holding the remaining 68.62 percent.

GPC operates the Galoc field with a 58.29 percent interest.

The remaining 41.71 percent is split between Nido Petroleum, with a 22.28 percent share, and several local partners.

Vitol, and European trader Trafigura, will be the two main marketers of the light crude, which has a higher sulphur content than most other Asia-Pacific crudes at 1.64 percent.

Galoc, if it fulfills expectations, will come as a relief for the country which is trying to cut its annual fuel import bill and is reeling from soaring fuel and food costs which have pushed annual domestic inflation to record highs.

Energy Secretary Angelo Reyes said this would translate to $1.4 billion in foreign exchange savings for the country from the start of commercial production until the life of the well ends.