Petroleum Service Contracts (PSCs / SCs)
Petroleum Service Contracts (SCs) are the primary legal instrument through which the Philippine government grants rights to explore, develop, and produce indigenous petroleum resources. The DOE oversees and administers all active SCs under the framework established by Presidential Decree No. 87 (PD 87), the Oil Exploration and Development Act of 1972 [PEP 2023-2050 Vol. II, p.9, 2023].
Philippine Conventional Energy Contracting Program (PCECP)
The PCECP is the DOE’s licensing mechanism for awarding petroleum SCs and Coal Operating Contracts (COCs). Governed by Department Circulars DC2017-12-0017 and DC2017-09-0010, it promotes a more transparent and competitive contracting process that is simpler, faster, and more strategic than previous rounds [PEP 2023-2050 Vol. II, p.1, 2023].
Since its launch in November 2018 through 31 May 2023, the PCECP received applications for 16 petroleum SCs comprising 5 Pre-Determined Areas (PDAs) and 11 Nominated Areas, generating PhP 12.67 million in application fees alone [PEP 2023-2050 Vol. II, p.1, 2023].
Active Service Contracts (as of 31 December 2023)
18 active SCs are under DOE supervision: 6 in production phase and 12 in exploration phase.
Production phase:
| SC No. | Operator | Location |
|---|---|---|
| 6B | Nido Petroleum Philippines Pty. Ltd. / NPG Pty. Ltd. | Northwest Palawan |
| 14C1 / 14C2 | The Philodrill Corporation | Northwest Palawan |
| 37 | PNOC Exploration Corporation | Cagayan |
| 38* | Prime Energy Resources Development B.V. | Northwest Palawan (Malampaya) |
| 40 | Forum Exploration, Inc. | Northern Cebu (Visayan) |
| 49* | China Int’l Mining Petroleum Company Ltd. | Southern Cebu (Visayan) |
*Producing
Exploration phase: SC 53, 54, 55, 57, 58, 59, 72, 74, 75, 76, 77, 79 across Mindoro, Palawan, Recto Bank, Cotabato, and East Palawan basins [PEP 2023-2050 Vol. II, Table 1, 2023].
Investment Incentives under PD 87
The following incentives apply to petroleum SC holders [PEP 2023-2050 Vol. II, p.9, 2023]:
- Service fee of up to 40% of net production
- Cost reimbursement of up to 70% of gross production with carry-forward of unrecovered costs
- Filipino Participation Incentive Allowance (FPIA) — up to 7.5% of gross proceeds for SCs with minimum 15% Filipino participation
- Exemption from all taxes except income tax
- Exemption from taxes and duties on imported materials and equipment for petroleum operations
- Free market determination of crude oil prices
Key Recent Awards
- SC 77 — awarded April 2022 to SK Liguasan Oil and Gas Corporation; Cotabato basin, 72,000 ha covering Sultan Kudarat, Maguindanao, North and South Cotabato
- SC 79 — awarded August 2023 to PNOC Exploration Corporation; East Palawan basin, 932,000 ha
- IEB Circular (6 July 2023) — enables joint DOE-MENRE award of SCs and COCs in BARMM, operationalizing RA 11054 [PEP 2023-2050 Vol. II, p.2, 2023]
Petroleum Reserves (as of December 2022)
| Classification | Oil (MMB) | Gas (BCF) | Condensate (MMB) |
|---|---|---|---|
| Reserves | 3.74 | 273 | 6.27 |
| Contingent Resources | 195 | 4,268 | 65 |
| Undiscovered Resources | 11,104 | 54,532 | 291 |
| Cumulative Production | 80.67 | 2,623 | 92.26 |
[PEP 2023-2050 Vol. II, Table 2, 2023]
Upstream Roadmap
Short-term (2023–2024): Drill 2 oil + 1 gas; produce 1.2 MMB oil + 220 BCF gas; increase resources by 4.5–15 MMB oil + 217 BCF gas
Medium-term (2025–2028): Drill 2 oil + 4 gas; produce 15.9 MMB oil + 522.4 BCF gas
Long-term (2029–2050): Drill 6 oil + 6 gas; produce 42.14 MMB oil + 4.6 TCF gas
Total projected investment: PhP 145.2 billion (oil) + PhP 2.2 trillion (gas) [PEP 2023-2050 Vol. II, Table 3, 2023].
Medium- to long-term exploration will also study naturally occurring gases such as hydrogen and Carbon Capture and Storage (CCS) for good geological storage [PEP 2023-2050 Vol. II, p.8, 2023].