Saturday, March 20, 2010

“Not Oil But Gas” - Pitkin

In his letter to Mr. Froilan A. Tampico, president and Chief Executive Officer of the
National Power Corporation (NPC), Energy Secretary Angelo T. Reyes revealed that the Pitkin Petroleum discovered natural gas instead of oil in their present exploration in the southern part of Occidental Mindoro.

The Department of Energy or the DOE is a party to Service Contract (SC) No. 53 in onshore Mindoro Island with Pitkin, a United Kingdom-based oil and gas exploration company.

According to a Pitkin report, they have drilled a natural gas discovery whom they call Progreso A1X. The oil company is proposing that NPC lease natural gas generators to replace the leased diesel generators and use the natural gas from the Progreso discovery as fuel. El Progreso, where apparently they discovered natural gas is part of Brgy. San Isidro (Canwaling), San Jose, Occidental Mindoro.

In said letter dated 6 March 2010, DOE is endorsing to Pitkin to the NPC to develop the resource through a supply agreement with the NPC-SPUG. The letter further stressed that any arrangement made should be “consistent with the government policy on private sector participation program in missionary areas promulgated by DOE.” The DOE is hoping that Tampico “will prioritize discussing the merits of converting an indigenous resource of natural gas to electrical power for the benefit of the residents of Mindoro Island.”

Pitkin Petroleum PLC believes that there is less 50% carbon emissions from natural gas compared with diesel. Also it claimed that natural gas is indigenous to Mindoro eliminating the need to buy and import diesel from other countries. It would also be much cheaper for NPC to use natural gas compared to diesel thereby reducing generating costs, they say.

With these latest developments, the people of Occidental Mindoro,- the lowlanders and the Mangyans, are opposing still the project due to various moral, economic and environmental reasons. But legally speaking, I would like to point out that the law that regulates the oil industry in the Philippines is a product of the dictatorial regime of Ferdinand E. Marcos : the Presidential Decree (PD) 87 or the “Oil Exploration and Development Act of 1972” also known as the “Service Contract Law”. It is one of the many Marcos laws that needs to be amended.

If we are to scrutinize closely said law governing exploration and utilization of our natural resources, we will find out how accommodating they are to foreign interests justifying that these foreigners have positive and indispensible contributions to make towards our economic development.

On the outset, the government and the oil exploration companies claim that their aim is to develop an indigenous Filipino oil industry but in reality its provisions are extremely favorable to foreign corporations like Pitkin Petroleum PLC. Hold on to your computer seats and here are some of their privileges:

1. The service contracts to explore onshore and offshore,- covering thousands and thousands of hectares, may be done through direct negotiations instead of public bidding;

2. Service contractors are exempted from paying tariff duties on all machinery and materials imported for their oil operations;

3. Service contractors do not pay taxes whatsoever. They are exempted from all taxes except income tax but the latter is in fact shouldered by the government;

4. They are not required to publish data concerning production, exportation, or sale of crude oil or gas discovered or produced in the Philippines;

5. A service contract is for seven years, extendable for three more years. If oil in commercial quantity is discovered, the contract can extend for as long as 25 years;

6. If a service contractor discovers and produces oil in commercial quantity, the government reimburses the company for all its operating costs. This provision has encouraged companies to buy machineries and services mainly from their sister companies at unusually high prices because anyway they will be reimbursed by our government;

7. The receipt from oil sales are divided as follows : first, the contractor gets back all his operating costs, then 60% of the net goes to the government and 40% goes to the service contractor. However, the income tax of the oil company is pais to the government out of the 60% share of the government itself;

8. Although it has no freight or transportation costs for local oil, a contractor is allowed to sell its products at the government price for imported oil. So, our people do not even benefit in terms of reduced prices for oil that is part of the natural wealth of our county;

9. Finally, our government guarantees that all profits of service contractor can be repatriated. This means that we have depleted our dollar reserves to provide them with dollars that they can take out.

In February 12, 2010, in a letter signed by Masli Quilaman, Executive Director of NCIP or the National Commission for the Indigenous Peoples said that there was no Certificate of Pre-condition issued by his office to Pitkin.

Last Thursday,- March 18, 2010, the Sangguniang Bayan of Sablayan headed by its presiding officer, Vice-Mayor Eduardo B. Gadiano, through a committee meeting recommended to Pitkin that it should first secure Certificate of Pre-condition from the NCIP before they could resume their operations within the ancestral domain of the Tau-Buid Mangyans in their municipality. Further legislative actions are expected from the SB are hoped by the Fakasadian Mangagoyang Tau-Buid Daga, Inc. or FAMATODI and Pantribung Samahan sa Kanlurang Mindoro (PASAKAMI), the two Mangyan organizations who are against SC 53.

But Pitkin representatives who were invited in the meeting insisted that the MOA between DOE-Pitkin and the newly-organized groups of Tau-Buids including the latter’s “Pahintulot” (“Permit to Operate’) are sufficient for them to resume their operation. The new group formed by Pitkin itself reportedly received an almost half a million peso worth of community projects from said petroleum company.

Lessons re-learned : The long tested “divide and rule” tactic is effective even in Mangyans communities; and, even a legislative “ghost” from the dark days of our history could still hound us as a nation….

(Map from Pitkin PLC website)

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