Energy Dept. seeks higher incentives for oil explorers

The Energy Department will persuade Congress to craft a bill giving more incentives to oil exploration companies, an official said Wednesday. "We plan to pass an exploration bill [to Congress] this year. The proposed law aims to address all the issues and provide more incentives to exploration companies," Energy Undersecretary Jay Layug said in an interview with reporters. The proposed law intends to replace the Oil Exploration and Development Act of 1972 or Presidential Decree 87 enacted during the Marcos regime. Layug said there is a need to revisit the existing law because it is no longer attuned with the times. "PD 87 is an antiquated law." The proposed bill will be submitted to Congress next month, with senators Sergio Osmeña and Juan Ponce Enrile and representatives Henedina Abad and Arnulfo Fuentebella as sponsors. The Energy Department is presently studying if there is a need to enhance how government shares revenues with project contractors, Layug said. Without impairing contracts The 60-40 sharing of revenues "could be enhanced or modified, but certainly without impairing the existing service contracts," he said. "It's important for the prospective foreign investor that the state respects contracts. We cannot adjust it now because there is the non-impairment clause in the Constitution," Layug said. The Energy Department can still proceed with the petroleum exploration contracting round this year while the bill is pending approval. The department has 12 to 15 oil and gas sites to auction this month, jump starting the stalled bidding for petroleum contracts. In December, Energy Secretary Jose Rene Almendras said the department is suspending the bidding for petroleum contracts until the Commission on Audit's (COA) concerns on taxes are addressed. COA found that the Malampaya gas-to-power project contractors were not paying corporate income tax as it was already deducted from government's 60 percent share in the sale of natural gas and condensates from the Malampaya gas field. — JE/VS, GMANews.TV