CEBU CITY, Philippines — Drilling of the six production wells in Alegria’s oil field is about to start.
This developed after Polyard Petroleum International Group Limited announced that they had entered into a Turnkey Drilling Service Agreement with a contractor that had provided oilfield engineering and technology services on January 11, 2020.
Petroleum Service Contract (SC) No. 49 is an onshore oil field located in Barangay Montepeller, Alegria town of southwestern Cebu. China International Mining Petroleum Co. Ltd. (CIMP), a subsidiary of Polyard Petroleum International Group Limited, holds SC No. 49.
In a two-page company disclosure submitted before the Hong Kong Stock Exchange and the Hong Kong Exchanges and Clearing Limited, Polyard Petroleum stated that CIMP had completed the exploration stage for SC No. 49 that covered the Alegria oil field.
As a result, the company signed a Turnkey Drilling Service Agreement with East Asia Oil Engineering Group Limited for the drilling of six production wells.
“After a continuous production for eight months, CIMP has already identified the primary production layers and wants to start drilling of production wells,” the statement said.
The Drilling Agreement, whose validity is only up to December 31, 2020, allows East Asia Oil to invest in an on-site oil refinery that can process 800,000 barrels of oil per annum.
“CIMP will offer lands for the setup and assist the contractor in securing all relevant permits, clearances, and approval from the national and regional administrative offices, regulatory agencies, and local government units for the construction and operation of the oil refinery, including but not limited to all health, safety, and environmental permits, and immigration and Customs clearances,” the company said.
Based on the Drilling Agreement, the contractor is tasked to “provide turnkey services to CIMP for the drilling of the six production wells and supply a full set of drilling equipment that includes equipment, materials and personnel for well drilling, mud logging, wire line logging, cementing, testing, completion and other related services”.
“Pursuant to the Drilling Agreement, the Contractor (East Asia Oil Engineering Group) will provide turnkey services to CIMP for the drilling of the six production wells and supply a full set of drilling equipment (including equipment, materials and personnel for well drilling, mud logging, wire line logging, cementing, testing, completion and other related services),” the disclosure said.
Polyard Petroleum further disclosed that each production well would cost US$ 815,000 — bringing to a total of US$ 4.9 million — excluding the 8 percent withholding tax.
The company added that the agreement would improve their crude oil selling activities.
Official exploration of the oil field in Alegria commenced in May 2018, and was led by President Rodrigo Duterte. CIMP acquired an 80 percent stake in the service contract that covers a 25-year production period.
Under Presidential Decree 87 or the Oil Exploration and Development Act of 1971, the Philippine government will get a 60 percent share from the net sales of the project. CIMP will get a 40 percent share.
The 60 percent share of the government will be further divided as follows: 60 percent will go to the national government, 18 percent to the Alegria municipal government, 14 percent to the host Barangay Montpeller, and 8 percent to the Cebu provincial government.
READ MORE: ‘DATO NA ANG ALEGRIA!’