By Angelo S. Samonte, Reporter, The Manila Times (12/28/2007)
President Gloria Arroyo has authorized the Department of Budget and Management (DBM) to release half of the disputed 40-percent net government share to the province of Palawan from the proceeds of petroleum production in the Camago-Malampaya reservoir.
In signing Executive Order No. 683 this month, the President said the funds intended for the province must be utilized “for the immediate and effective implementation of development projects for the people of Palawan.”
Mrs Arroyo noted that she has “a broad perspective of the requirements to develop Palawan as a major tourism destination from the point of view of the national government, which has identified the Central Philippine Super region for tourism infrastructure investments.” Palawan is a part of the Central Philippine super region.
Before the issuance of the order, the national government and the province of Palawan forged a provisional implementation agreement as the court determines “whether the Camago-Malampaya reservoir is within the territorial boundaries of the province of Palawan.”
If the court decides in favor of the local government of Palawan, the province will be entitled to 40 percent of the net government share in the proceeds of the project covered by Service Contract No. 38 signed by the national government in 1990.
The President instructed the Energy department and the Philippine National Oil Co.-Exploration Corp. to submit a directive from the Office of the President allowing the release of the funds or a written request from the Province of Palawan, the Palawan Congressional Districts or the highly urbanized City of Puerto Princesa for the funding of designated projects.
The EO specifically states that the designated projects “must fall under the investment program of the Province of Palawan, Puerto Princesa City, and the development projects identified in the development program of the National Government or its agencies.”
The EO 683 provides further “that the DBM shall be subject to the actual collections deposited with the National Treasury, and shall be in accordance with the Annual Fiscal Program of the National Government.”
In December 2005, the President officially gave the go-ahead for the Department of Energy to immediately explore, develop and produce crude oil from the Camago-Malampaya reservoir as prices of oil and petroleum products in the world market escalate.
The government said it is imperative for the energy department to aggressively pursue its energy independence agenda, including the development of domestic oil reserves.
On December 11, 1990, the government, through the Energy department, entered into a service contract with a consortium composed of Shell Exploration B.V., Shell Philippines LLC, Chevron Malampaya LLC and PNOC-Exploration Corp. to explore and develop petroleum resources in northwest Palawan.
The Energy department and the contractor jointly declared in April 1998 that the petroleum found in the areas designated as the Camago-Malampaya and San Martin reservoirs was in commercial quantity.
But while the Camago-Malampaya reservoir is known to contain both natural gas and oil resources, the contractor said the project is not commercially viable, based on its own evaluation.
In her order, the President instructed the Energy department to pursue the exploration, development and production of crude in the area by considering national interest without disregarding the existing rights of the contractor.