Shell Philippines buys stake in Gindara oil prospect

Shell Philippines Exploration B.V. (SPEx), a subsidiary of Netherlands-based Royal Dutch Shell Group PLC, on Monday said it has partnered with Australia-based Nido Petroleum Ltd. in the Gindara oil prospect in northwest Palawan. Jocot de Dios, Nido Petroleum president and CEO, said that Spex has “farmed in" at the Gindara prospect, also known as service contract 54-block B or SC 54-B. Farm in is an arrangement whereby an oil operator buys in or acquires an interest in a lease or concession owned by another operator, in which oil or gas has been discovered or is being produced Shell Philippines will shoulder 75 percent of the cost of drilling the Gindara-1 exploration well, with an estimated total cost of $24 million, and $2.5 million for the seismic costs, De Dios said. SPEx will also pay on pro-rated basis its share in the “2010 and 2011 Work Programme and Budget" once the farm-in deal is signed, according to Nido Petroleum. De Dios said that once the SPEx farm in at SC 54-B is completed, the participating interests in Gindara-1 shall consist of SPEx with 45 percent, Nido Petroleum (33 percent), and Kairiki (22 percent). Nido Petroleum has a 60-percent stake in SC 54-B, and Kairiki Energy Ltd. — another Australia-based oil explorer — holds the rest of the stake. De Dios pointed out that Nido Petroleum will remain as the “operator" of Gindara-1 offshore exploration well. Nido Petroleum expects to narrow down the Gindara-1 drilling window within the March-May 2011 period, according to him. “It is with great pleasure that we welcome Shell as a partner in the SC 54-B consortium. Shell is amongst the largest and most experienced oil and gas companies in the world. It has had over 96 years of operations in the Philippines and a deep understanding of its oil and gas sector," De Dios said. “This arrangement allows Nido to quickly drill Gindara, our leading prospect, and remain focused on maturing exploration drilling plans in SC 58 and SC 63. Nido is working to deliver the five well exploration programs announced earlier in the year," he added. Gindara is about 50 kilometers south of the SPEx-operated Malampaya gas field in SC 38 — the largest oil discovery in the Philippines. Jon Pattillo, Nido Petroleum head of exploration, said: “An important element of Nido’s exploration strategy has been [joined by] the company of Shell’s global stature [that] brings world-class development experience and access to cutting edge technology. Nido looks forward to working closely with Shell on this exciting project." Nido has started the detailed drilling plan, including the long-lead items and other materials that would have to be bought for the drilling operation, he added. — JE, VS/GMANews.TV