The government formally declared a new oil discovery in the central part of Cebu province, allowing an Australian company to establish a commercial field in the area.
Gas2Grid Ltd. of Australia said the Energy Department approved its application to declare the Malolos-1 oil well on the shore of Cebu as an oil discovery.
“The company advises that the Philippine Department of Energy has formally recognized Malolos-1 as an oil discovery and approved an extension of SC [Service Contract] 44 in order to conduct oil production with the aim of establishing a commercial oil field,” Gas2Grid said in an announcement.
SC 44, issued in 2004, covers 750 square kilometers in central Cebu. Gas2Grid said the one-year extension of the contract would start Jan. 28. The company said it planned to conduct a longer period of oil production testing to establish the commerciality of SC 44 starting February, subject to equipment availability.
The testing is estimated to cost up to $1 million. The recent oil test set the production rates at 100 to 200 barrels per day.
“We consider that the longer- term testing will also enable an independent expert to certify and convert some of the contingent resource of oil in place into proven, probable and possible oil reserves,” it said.
The company said available technical data indicated a possibly much larger Malolos oil field than initially assessed.