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°2 Republic of the Philippines
® DEPARTMENT OF ENERGY

(Kagawaran ng Enerhiya)

DEPARTMENT CIRCULAR (DC) NO. _0C2023 - /I - 003!

GUIDELINES ON THE AWARDING OF SERVICE CONTRACTS FOR THE
EXPLORATION, DEVELOPMENT AND PRODUCTION OF NATIVE HYDROGEN

WHEREAS, Section 2, Article XII of the 1987 Constitution provides that “xxx The
exploration, development, and utilization of natural resources shall be under the full
control and supervision of the State. The State may directly undertake such activities,
or it may enter into co-production, joint venture, or production-sharing agreements with
Filipino citizens, or corporations or associations at least sixty per centum of whose
capital is owned by such citizens. Such agreements may be for a period not exceeding
twenty-five years, renewable for not more than twenty-five years, and under such
terms and conditions as may be provided by law. xxx";

WHEREAS, Section 2 of Presidential Decree (PD) No. 87 or the Oil Exploration and
Development Act of 1972, as amended, was declared to be the policy of the State to
hasten the discovery and production of indigenous petroleum through the utilization of
government and/or private resources, local and foreign, under the arrangements
embodied in this Act which are calculated to yield the maximum benefit to the Filipino
people and the revenues to the Philippine Government for use in furtherance of
national economic development, and to assure just returns to participating private
enterprises, particularly those that will provide the necessary services, financing, and
technology and fully assume all exploration risks;

WHEREAS, Section 4 of PD 87 provides that the Government may directly explore for
and produce indigenous petroleum or indirectly undertake the same under service
contracts;

WHEREAS, Section 3 of PD 87 provides that “petroleum shall include any mineral oil
hydrocarbon gas, bitumen, asphalt, mineral gas and all other similar or naturally
associated substances with the exception of coal, peat, bituminous shale and/or other
stratified mineral fuel deposits”;

WHEREAS, native hydrogen refers to naturally occurring hydrogen gas in geologic
formations which can be considered as a mineral gas":

WHEREAS, various studies? have documented several observations of seeps of
native hydrogen, together with abiotic methane on the seafloor and on the continents

‘ Abrajano et al. 1988. Methane-Hydrogen Gas Seeps, Zambales Ophiolite, Philippines: Deep Or Shallow Origin?. Chemical
Geology. Issue No. 71. Pages. 211-222;

Etiope et al. 2011. Abiotic Methane Flux from the Chimaera Seep and Tekirova Ophiolites (Turkey): Understanding Gas
Exhalation from Low Temperature Serpentinization and Implications For Mars. Earth and Planetary Science Letters. Issue No.
310. Pages 96-104;

Etlope et al. 2017. Methane and Hydrogen in Hyperalkaline Groundwaters of the Serpentinized Dinaride Ophiolite Belt, Bosnia
and Herzegovina. Applied Geochemistry. Issue No. 84. Pages 286-296;

Zhu et al. 2023. A Model to Predict the Thermodynamic Stability of Abiotic Methane-Hydrogen Binary Hydrates in a Marine
Serpentinization Environment. https://doi.org/10.3389/fmars.2023.1140549;

? Smith et al. 2005. Hydrogen Exploration: A Review of Global Hydrogen Accumulations and Implications for Prospective Areas
in NW Europe. http://pgc.lyelicollection.org;

Etiope and Schoell 2014. Abiotic Gas: Atypical, But Not Rare. DOI: 10.2113/gselements.10.4.291;

Prinzhoffer and Deville 2015;

Energy Center, Rizal Drive wa a Street, Bonifacio Global City, Taguig City, Philippines 1632
No. (Trunkline) (632) 8479-2900
Website: h he eee, doe.gov.ph; E-mail: info@doe.gov.ph

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DC No.:
Guidelines on the Awarding of Service Contracts for the Exploration, Development and Production of
Native Hydrogen

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(e.g. Mt. Chimaera in Turkey, Semail Ophiolite in Oman, and Los Fuegos Eternos in
the Philippines) in the last three decades, proving the natural occurrence of hydrogen
as gas in the environment formed through a number of mechanisms and may be
considered as mineral gas;

WHEREAS, the exploration, development, and production of native hydrogen found
in geological formations are the same with “natural gas” as provided under Section 3
of PD 87, which are obtained from boreholes and wells and consisting primarily of
hydrocarbons;

WHEREAS, the Department of Energy (DOE) is continuously adopting new
mechanisms and strategies to effectively carry out its plans and programs as
mandated under PD 87, as amended, including its implementing rules and regulations;

WHEREAS, there is a need to provide guidelines to accelerate the exploration,
development and production of native hydrogen to contribute to the country’s energy
security, create jobs, and generate wealth;

WHEREAS, Section 4 of Republic Act No. 7638 or the DOE Act of 1992, as amended,
mandates the DOE to prepare, integrate, coordinate, supervise, and control all plans,
programs, projects, and activities of the Government relative to energy exploration,
development, utilization, distribution, and conservation;

NOW, THEREFORE, in consideration of the aforementioned premises, the following
policy is hereby adopted and promulgated.

Section 1. Policy. The exploration, development and production of naturally occurring
native hydrogen shall be governed by PD 87, as amended, and shall be implemented
under the rules, regulations, issuances and procedures issued by the DOE relevant to
the conduct of petroleum exploration, development and production.

Section 2. Repealing Clause. All issuances that are inconsistent with this Circular
are hereby repealed or amended accordingly.

Section 3. Effectivity. This Circular shall be effective fifteen (15) calendar days upon
its publication in two (2) newspapers of general circulation. A copy of this Circular be
filed with the University of the Philippines Law Center - Office of the National
Administrative Register (UPLC-ONAR).

Issued on November 2023 at Energy Center, Rizal Drive, Bonifacio Global City,
Taguig City, Metro Manila.

RAPHAEL P.M. LOTILLA
Secretary

NOV 09 2023

Frery et al. 2021. Natural Hydrogen Seeps Identified in the North Perth Basin, Western Australia. Science Direct. Journal
Homepage: www.elsevier.com/locate/he;

McMahon 2023. Natural Hydrogen Seeps as Analogues to Inform Monitoring of Engineered Geological Hydrogen Storage.
Department of Civil and Environmental Engineering, University of Strathclyde, Glasgow, UK;

Levy et al. 2023. Looking for Natural Hydrogen in Albania and Kosova. https://doi.org/10.3389/feart.2023. 1167634