Shell, Chevron going for Gindara farm-in agreement

Shell Philippines Exploration BV and Chevron Malampaya LLC are targeting a farm-in agreement for the Gindara block oil prospect in northwest Palawan — possibly the biggest oil find in the country. A Southern Cross Equities report, commissioned by Australia’s Kairiki Energy Ltd. to study its ongoing projects, revealed that the Gindara block consortium — under service contract 54B — composed of Kairiki and Nido Petroleum Ltd., are in talks for a possible partnership with Shell Philippine and Chevron Malampaya. "We understand that negotiations have been ongoing for some time with neither side agreeing to terms," Southern Cross, an Asutralian stock broker and financial advisory group, said in the report. The report did not name the companies the consortium has been in talks with, but industry officials have confirmed Shell Philippines and Chevron Malampaya are among those willing to sign a farm-in agreement with the consortium. Development of the Gindara field would require $30 million. Southern Cross said the Gindara consortium should spread out risks by tapping partners for the oil prospect. "Nido and Kairiki have the option to drill the Gindara prospect on their own which would mean higher risk approach but also provide much higher reward," said Southern Cross. Earlier, Nido head of exploration Jon Patillo said the Gindara block has matured into an outstanding prospect and is now the highest ranked drilling candidate in Nido's Northwest Palawan portfolio "in terms of its excellent risk profile and potential significance to the company. "The prospect is comparable in scale to Shell’s Malampaya field, 30 kilometers to the north, but located in only 320 meters of water and close to the joint venture's recent discoveries at Tindalo and Yakal in adjacent SC 54 Block A," he said. The consortium plans to begin its exploration drilling program in 2011. Shell Philippine and Chevron Malampaya hold 45 percent each in the Malampaya project near the Gindara block. The Malampaya project has an estimated recoverable reserve of 600 million barrels of oil. —JE/VS, GMANews.TV