Energy Secretary Raphael Lotilla—INQUIRER FILE PHOTO
The Department of Energy (DOE) has created a panel of advisers to sort out the legal issues surrounding the upstream oil and gas sector, including the controversial Malampaya gas-to-power project, which supplies about 20 percent of the country’s electricity requirements.
In a virtual media briefing on Thursday, Energy Secretary Raphael Lotilla announced that the DOE has enlisted retired chief justices Artemio Panganiban Jr. and Reynato Puno to pore over the legal concerns in projects involving the prospecting, drilling and production of crude oil and natural gas—or the upstream sector—and clear the air to make energy exploration and development attractive to investors.
Lotilla said Panganiban and Puno “have kindly agreed” to co-chair the Law and Energy Advisory Panel, comprised of distinguished senior legal consultants from the private sector, created “pursuant to the President’s instructions to accelerate and expand the development of our indigenous energy resources” and ensure that the DOE’s policy recommendations to the President and Congress “are fully grounded on the Constitution, the laws of the land, and sound legal principles.”
“They will serve as private citizens and will not assume any public office. The full legal responsibility and accountability will continue to reside in the [DOE],” added Lotilla.
READ: DOE to scrutinize controversial Malampaya deal
The council will also be responsible for guiding the DOE on various energy-related reform initiatives and legal matters, including the promotion of indigenous and low-carbon sources.
The panel will likewise render legal advice on the objectives, content and overall substance of the energy sector’s legislative agenda that cover alternative sources and new technologies and assist the DOE in enhancing its legal processes to help achieve its mandate and encourage investments from the private sector.
Harnessing the country’s indigenous energy resources and tapping natural gas were among the government’s top agenda that President Marcos outlined in his State of the Nation Address last month.
The Marcos administration, according to the energy chief, made it a priority to address any of the legal uncertainties over the upstream sector, or the exploration and production of crude oil and gas, “because the natural gas of the country, for instance, is needed not only as a backup or to regulate variable renewable but even before that’s the major source of power, especially for the island of Luzon.”
Marcos as signatory
During the briefing, Lotilla said the approval and signing of service contracts by President Ferdinand Marcos Jr. would also be tackled in discussions with the private sector.
“Along these lines, the legal cluster of the Cabinet has looked at the issues emanating from the Japex case ruling of the Supreme Court way back in 2015 that it is the President who must personally sign the service contracts in order for them to be valid,” Lotilla explained.
He was referring to the high court ruling on the Japan Petroleum Exploration Co. Ltd. (Japex) case, which declared Service Contract No. 46 as null and void since it was signed only by former Energy Secretary Vicente Perez Jr., not by the President, in violation of the 1987 Constitution.
SC 46 authorized the exploration, development and exploitation of petroleum resources within Tañon Strait, a narrow passage of water situated between the islands of Negros and Cebu.
READ: SC declares oil exploration in Tañon Strait unconstitutional
Taking off from the high court verdict, Lotilla said the Cabinet’s legal cluster concluded that Mr. Marcos holds the discretion “to approve and sign the service contracts that remain effective and were issued” since the 1987 Constitution was enforced.
“This will be subject of consultations with private service contractors on whether they will be amenable to this resubmission for the President’s approval and signing of the service contracts,” he added.
Year-end target
Lotilla promised that the DOE would decide within the year on the planned takeover by ports and gaming tycoon Enrique Razon Jr. of the Malampaya project.
He said state-run Philippine National Oil Co.-Exploration Corp. (PNOC-EC), a member of the Malampaya consortium, was considering the matter of giving its consent” to the sale of Shell’s interest in the Malampaya gas field.
“If you examine the Department Circular in fact, the schedules are quite tight… I don’t think that it would go beyond this year,” he added, referring to Department Circular No. 2007-04-0003 which states the rights and obligations under a petroleum service contract shall not be assigned or transferred without the DOE’s prior approval.
Prime Infrastructure Capital Inc. signed in July, through its subsidiary Prime Exploration Pte. Ltd., a share purchase agreement to acquire MEXP Holding Pte. Ltd. from Udenna Corp. of Davao-based businessman Dennis Uy. MEXP earlier bought the 45-percent stake of Shell Petroleum in the Malampaya project.
Uy already owns a 45-percent interest stake in Service Contract No. 38, which covers Malampaya, by earlier buying the share of Chevron Philippines Ltd.
The DOE is yet to announce the technical and financial advisers that will assist the agency in the proposed sale.
“As far as the DOE is concerned, we will review this but I can assure you that we will try to address this matter within the year,” he said.