The 7th PH-EITI report, industry outlook transparency for oil, gas and mineral resources (Part 1)
by Marcelle P. Villegas - September 01, 2021
The PH-EITI National Conference 2021 was held last July 29 with the theme "Resiliency in Transparency".
PH-EITI or Philippine Extractive Industries Transparency Initiative, is a government-led, multi-stakeholder initiative that implements EITI. The initiative started on 26 November 2013 under Executive Order No. 147, series of 2013. It is a government commitment first announced through EO No. 79, s. of 2012. The initiative aims to promote the open, accountable management and good governance of oil, gas and mineral resources industries. The three-hour webinar/conference featured various keynote speakers.
“This is the second year that we are holding this meeting online due to the pandemic. This underscores the exceptional circumstance under which we have to operate into the foreseeable future. Nevertheless, I congratulate the EITI for its efforts to organize this national conference and produce an annual report despite all the challenges.” This was part of the Opening Remarks given by Hon. Carlos G. Dominguez, Secretary of Department of Finance.
He defended the importance of the extractive industries like mining despite the common belief of some groups that these are bad for the environment. “By their nature, the extractive industries involve multi-faceted and complex issues. It is easy to merely brand extractive practices as harmful to the environment. Regulations must ensure the balance between economic and environmental concerns to realize the best outcomes for our people.”
Sec. Dominguez explained that EITI helps in achieving that balance by providing fair and accurate data about the extractive industries by describing it as a credible source of information to aid policymakers on the proper fiscal regime for mining.
“…EITI enables the productive exchange of information and positive dialogue among stakeholders. This clears the air of misinformation… The most important value we need to uphold at all times is transparency. Without this, there will be constant suspicion and all sorts of unfounded claims… Increased accountability will improve governance of the sector and management of natural resources.”
Sec. Dominguez mentioned that data transparency not only builds public trust but also brings institutional and sectoral resilience. Such resilience leads to better coordination, appropriate interventions and greater agility in times of crises.
Other speakers in the forum include Hon. Jose "Joey" Salceda who gave a Keynote Speech. He is the Representative of Second District of Albay and Chair of the House of Representatives Committee on Ways and Means.
“Key findings of the Seventh PH-EITI Report” was discussed by Hon. Bayani H. Agabin, who is the Undersecretary of Department of Finance and Chair of Philippine EITI.
“Industry Outlook” was reported by Hon. Ma. Teresa S. Habitan. She is the Assistant Secretary of Department of Finance and the Alternate Chair of Philippine EITI.
The Executive Director of Chamber of Mines of the Philippines, Atty Ronald Recidoro, reported “The Social Development and Management Program”.
“The National Wealth Shares Portal” was the topic of Mr Rainier H. Diaz, Chief Budget and Management Specialist of the Department of Budget.
“Mainstream Action Plan” was reported by Mr Vincent T. Lazatin, National Coordinator, Bantay Kita - Publish What You Pay Philippines.
“The PH-EITI work plan and progress of EITI implementation” was discussed by Eastwood D. Manlises, National Coordinator, Philippine EITI.
Finally, the closing remarks was delivered by Hon. Dakila Carlo Cua, Governor, Provincial Government of Quirino, and President, Union of Local Authorities of the Philippines.
The event was hosted by Triciah Terada.
Executive Summary and Overview of the 7th PH-EITI Report
The Seventh PH-EITI Report covers data from fiscal year 2019 and the early part of 2020. The goals of the report are the following:
1. Show direct and indirect contribution of extractives to the economy (through EITI process);
2. Improve public understanding of the management of natural resources and availability of data;
3. Strengthen national resource management / strengthen government systems;
4. Create opportunities for dialogue and constructive engagement in natural resource management in order to build trust and reduce conflict among stakeholders; and
5. Pursue and strengthen the extractive sector’s contribution to sustainable development.
As an outlook, the Philippines started to implement the EITI for eight years from its membership. Of note, the Philippines was the first to successfully obtain a Satisfactory Progress assessment in 2017. Since 2013, the PH-EITI has been publishing reports yearly. 
From their outlook report, they mentioned that 2019 is a notable for the Mining and Quarrying (MAQ) Industry for two reasons.
1. The industry’s share in Gross Domestic Product (GDP) decreased by PHP1.7 billion to 0.83% due largely to several mines closing. This was despite the fact that the Philippines’ GDP increased by PHP1.3 trillion.
Analysis: As presented in Chart 1 in line with the rest of the data from the Philippines Statistics Authority (PSA), the average annual growth rate (AAGR) of the country’s GDP from 2013 was 8.4%, and it was consistently increasing every year with 2018 being the highest at 10%. Even so, year-on-year (YOY) growth in MAQ was fluctuating; falling in 2015 to -17%, and eventually peaking in 2017 at 18%. Much of the reason for this fluctuation is the stifling regulation of the extractive industry. As a matter of fact, the substantial drop after 2014 was attributable to “The Philippine Mining Act of 1995 which stipulates that the state owns all mineral resources on public and private lands within the territory and exclusive economic zones of the country. In effect, the act regulated the Philippines’ mineral resource development eventually deliberalizing it. 
2. The second reason is due to the sudden surge of COVID-19 which affected the industry. This was first identified in Wuhan, China in the latter part of 2019. At first, the new disease was not previously seen as a global threat. It was only the following year when the global health emergency began. In the Philippines, the disease led to the implementation of official lockdown in most parts of the country on 17 March 2020.
More on the Extractive Industry
The first chapter of the Seventh Report detailed the top contributors of the extractive industry by region. Its total value addition in 2019 was PHP162 billion. As per Chart 2 with raw values from Philippine Statistics Authority (PSA), the mining sector had the highest gross share, making up almost two-thirds of it. This was followed by oil and gas at 24%, and coal at 14%.
Mining and Quarrying (MAQ) companies contributed much in the nation’s employment rate. They have around 210,961 workers in July 2019.
The report also pointed out that mineral products and non-metallic mineral manufactures comprised 6.6% of total exported commodities which were valued at USD4.9 million. “As far as government revenues from these sectors were concerned, it is worth reiterating that it contributed more than a quarter billion PHP in the form of national and local taxes, fees, and royalties.”
According to Mines and Geosciences Bureau (MGB), there were 50 metallic mines in operation; 10 of which extracted gold, 3 copper, 31 nickel, 3 chromite, and 3 iron. And as per PSA, metallic mining had the biggest contribution to Gross Value Added (GVA) of the MAQ industry at 35%. It also had the greatest gross share in the production value of mining at a little less than 67%.
The Philippines, therefore, has more metals in its production of these commodities.
As for Non-metallic mining, there were more in operation in the same period at 53, 28 are limestone/shale quarries, 3 marble/marblelized limestone, 2 silica, 13 aggregate, 1 dolomite, 3 clay, 1 sand and gravel, 1 volcanic tuff, and 1 greywacke/pozzolan. “With respect to its share in MAQ’s GVA, it stood at a little more than 31%. As a proportion of the mining sector’s volume of gross production, non-metallic mining’s was 33% which, in absolute terms, was almost half of that of metallic mines.”
For oil and gas, covering the fiscal year 2019, Department of Energy (DOE) reported the oil production in the Philippines was all sourced from Galoc, Nido, Matinloc, and Alegria. The report stated that Galoc was the most prolific among the others, comprising 96% of the total extracted at 744,449 barrels. Nido was second at 20,634; then Alegria at 9,468; and Matinloc at 1,542.
According to the report, “…the output from the Malampaya field was not as significant in comparison with these oil fields. Conforming to PH-EITI37, the petroleum service contract operators that voluntarily report to the organization are The Philodrill Corporation, Galoc Production Company WLL, the state-owned PNOC Exploration Corporation (PNOC-EC) of the Philippine National Oil Company (PNOC), Shell Philippines Exploration B.V. (SPEX), and China International Mining Petroleum Company Ltd.”
(to be continued)
Place your Ad Here!
Philippine Resources - October 13, 2022
$72-M investments seen in Palawan drilling
Photo: Nido Petroleum Company Logo Some USD72 million worth of investments are expected in the two drilling activities of Nido Petroleum Philippines Pty. Ltd. in northwest Palawan, an official of the Department of Energy (DOE) said Wednesday. In a virtual press conference, DOE Undersecretary Alessandro Sales said Nido aims to spend USD16 million each for drilling Service Contract (SC) 6B and SC 54. An additional USD40 million will also be spent for the extended production test in the Cadlao oil field, he said. Sales said the extended production test in SC 6B aims “to determine how to optimize future production and determine the more appropriate way in installing the permanent production facilities”. “Foreign investors have taken the assurances made by the Philippine government that our PD (Presidential Decree) 87 framework for giving incentives to the service contractors is going to be upheld,” DOE Secretary Raphael Lotilla said. Lotilla said the ultimate objective of the policy is to yield the maximum benefit to the Filipino people and to assure just returns to participating private enterprises. Sales said the drilling activities in Cadlao are expected in the first half of 2023, with the extended production testing running up to six months. If the drilling activity is successful, permanent production is expected by the first half of 2024, he added. President Ferdinand “Bongbong” Marcos Jr. has directed the DOE to focus on expanding and harnessing the country’s indigenous energy resources to achieve energy security and affordable electricity prices. By Kris Crismundo Article courtesy of the Philippine News Agency
Philippine Resources - January 09, 2023
PH, China agree to resume oil, gas talks at an 'early date'
Chinese President Xi Jinping and President Ferdinand R. Marcos Jr. (File photo courtesy of Bongbong Marcos Facebook page) The Philippine and Chinese governments have agreed to resume talks on oil and gas exploration in the South China Sea at an "early date" following the bilateral summit between President Ferdinand R. Marcos Jr. and Chinese President Xi Jinping on Jan. 4. In a joint statement, the Department of Foreign Affairs and the Chinese Foreign Ministry said discussions would build upon the outcomes of the previous negotiations during the Duterte administration, "with a view of benefiting the two countries and their peoples." "On oil and gas cooperation, both sides agreed to bear in mind the spirit of the Memorandum of Understanding on Cooperation on Oil and Gas Development between the Government of the People’s Republic of China and the Government of the Republic of Philippines signed in 2018, and agreed to resume discussions on oil and gas development at an early date," the statement read. The two parties also agreed to explore cooperation in areas of solar power, wind energy, electric vehicles and nuclear energy for electricity generation, among others. Talks on a possible oil and gas exploration in the South China Sea were terminated during the time of former President Rodrigo Duterte over constitutional constraints. After repeated requests from China, both sides eventually held an "initial discussion" in July and August for the possible revival of negotiations. The public is assured that any agreement that would come out from the discussions would be "in accordance with the Philippine Constitution". The 1987 Constitution states that the exploration, development, and use of natural resources should be under the "full control and supervision" of the Philippine government. 'Not the sum total' Meanwhile, Marcos and Xi agreed to appropriately manage the South China Sea row through peaceful means as they emphasized that maritime issues "do not comprise the sum total of relations" between Manila and Beijing. Both sides reaffirmed the importance of maintaining and promoting peace and stability in the region and the freedom of navigation in and overflight above the South China Sea. The two leaders, the joint statement said, had also "reached consensus on the peaceful resolution of disputes" on the basis of the Declaration on the Conduct of Parties in the South China Sea, the United Nations Charter and the 1982 United Nations Convention on the Law of the Sea. Stronger maritime cooperation between Manila and Beijing is also expected as both parties agreed to collaborate closely on the mitigation of marine debris and microplastics and towards the establishment of a partnership between coastal model cities of the two countries. During the summit, Marcos and Xi made a commitment to further strengthen the China-Philippines relationship of Comprehensive Strategic Cooperation under new circumstances, "as close neighbors, kin and partners that help and understand each other towards win-win results". Article courtesy of the Philippine News Agency
Philippine Resources - July 31, 2022
Malampaya acquisition deal signed
Photo credit: A subsidiary of Enrique Razon Jr.-led company has signed a share purchase agreement to formalize the acquisition of stakes in Malampaya gas field from Dennis Uy’s firm. In a statement Friday, Prime Infrastructure Capital, Inc. bared that its unit, Prime Exploration Pte. Ltd., sealed the share purchase deal with MEXP Holding Pte. Ltd., a subsidiary of Udenna Corp. Prime Infra added the transaction is still subject to the consent of the Philippine National Oil Company Exploration Corp. (PNOC EC) and the Department of Energy (DOE). To recall, MEXP acquired 45-percent share of Shell Philippines Exploration B.V. (SPEX) in Malampaya deep-water gas-to-power project. SPEX is also the operator of the natural gas field. MEXP’s buyout of SPEX’s share in Malampaya was a subject of Senate inquiries in 2021. Senator Sherwin Gatchalian then urged the DOE to carefully assess the financial health of Udenna’s subsidiary. Prime Infra said its acquisition of shares in Malampaya will inject investments to expand Malampaya operations, adding it supports the administration’s goal of energy security. “We believe that gas is an important transition fuel in the near-term, reducing the need for baseload fossil fuels like coal. Hence, we intend to accelerate investments on the Malampaya gas field to improve the output of existing wells and, if possible, develop new wells in the area once the license extension is secured from the government,” Prime Infra chairperson Enrique Razon Jr. said. Razon added that Prime Infra, Shell, and Udenna are working closely to ensure the smooth transition of Malampaya operations from SPEX to Prime Exploration. By Kris Crismundo Article courtesy of the Philippine News Agency
Place your Ad Here!
Philippine Resources - May 23, 2023
MEMORANDUM OF AGREEMENT SIGNED WITH TVI RESOURCE DEVELOPMENT (PHILS.) INC.
Photo credit: TVI Resource Development The Board of RTG Mining Inc. is pleased to announce that a comprehensive settlement of all outstanding issues with the Villar Family controlled Sage Capital and TVI Resource Development (Phils.) Inc. (“TVIRD”) has been reached and a binding Memorandum of Agreement signed. On execution of the final documents, expected in the next month, all litigation that RTG had launched will be withdrawn as part of an agreed restructuring of the Mabilo Project. The Villar Family is one of the most prominent families in the Philippines and RTG is pleased to partner with them in the development of the Mabilo Project, which is a significant mining project for the country. The key terms of the agreement for RTG include the following: RTG (through SRM Gold Limited) will retain a 40% interest in Mt. Labo Exploration and Development Corporation (“Mt. Labo”) with the project also developed by Mt. Labo, in line with Philippine regulatory requirements, with Sage Capital (which is owned by TVIRD) holding the remaining 60%; RTG will have a 2% net smelter royalty (“NSR”); RTG’s debt together with interest, currently in the order of US$27M (subject to audit) will be repaid out of the proceeds of Stage 1 of the project, the Direct Shipping Operation subject to customary requirements to address liquidity and ongoing operations of Mt. Labo; Funding arrangements for the project as between the major shareholders of Mt. Labo have been successfully renegotiated, (relieving RTG of a sole funding obligation) and replaced with a pro-rata funding obligation, together with a disproportionate funding obligation of Sage Capital, as set out below; With debt repayments in full and the NSR, RTG will be entitled to approximately 57% of the proceeds of Stage 1, the Direct Shipping Operation; RTG will be entitled to 40% of the operating cashflow of the project, together with the 2% NSR and repayment of its debt, which is currently in the order of US$27M; The first US$5M of expenditure for Mt. Labo (or 12 months of expenditure, whichever occurs the earlier), will be funded pro-rata between the two shareholders (ie RTG will provide 40%) and thereafter, Sage Capital/TVIRD will sole fund the next US$5M of expenditure, with all additional funding thereafter to be provided on a pro-rata basis; All parties are required to act in the best interests of the project and not compete; A shareholders’ agreement will be finalised which will provide typical minority interest protection clauses including reserve matters for voting including annual budgets and appointments of key personnel; Any disputes will be resolved by the Singapore International Arbitration Centre; and On completion of final signed documents, all litigation matters will be withdrawn and settled in full. With the restructuring of the Mabilo Project now agreed, over the balance of this year, the remaining permitting matters and financing plans will be finalised, a review of the 2016 Feasibility Study will be completed, together with finalising the acquisition of surface rights, following which, a commitment to development will be formalised by the Board of Mt. Labo. RTG is pleased with the outcome of the discussions and the co-operative and constructive approach adopted by the Villar Family representatives. RTG believes they can be a strong and positive partner to work with to take the Mabilo Project forward, with both a near term development and future exploration activities to expand the project, which will start to unlock the value of the project for all stakeholders, not only the local communities but for the country as a whole.
Philippine Resources - May 22, 2023
Mining Operational Excellence Through Digital Transformation
Part 1: Mining Operation Challenges and Mine Operations Management Domains 1 & 2. By Mae Ann Cabasag, EM Mining companies encounter numerous challenges throughout their operations. However, initiatives to mitigate these challenges and improve efficiency are often limited. Most of these limitations emanated from a common factor: the challenge of “poor visibility” in mining operations. A viable solution is to adopt digital transformation in mining operations by incorporating available real-time data into an integrated system— capable of ensuring automatic updates and reliable source of information. Through this, mining companies not only understand simulations and plans developed but also anticipate potential outcomes. Various mining industry analysts have found that using non-digital methods in the mining operations can lead to a 27% reduction in production time and 25% increase in data inaccuracy. For a mining company to remain competitive in an industry susceptible to operation challenges, i.e. production processes, workers’ and equipment performances, ore quality and quantity, compliance to regulations, and inter-departmental collaboration, it needs to embrace digital transformation. Dassault Systèmes Mine Operations Management provides transformative digital solution for mining companies to achieve excellence in their operations. Mine Operations Management (MOM) equips mining companies with an integrated system for their mining operations, enabling them to achieve efficient plan and schedule. This system integrates entire operation data into a single repository source of information, known as the “single source of truth”, ensuring complete transparency of the company’s processes from mine to port. By leveraging MOM, we can address the following global mining industry challenges: Maintaining competitiveness amidst market volatility. Eliminating waste materials, poor communication, and error duplication. Improving site productivity and efficiency. Utilizing assets and sharing best practices across the value chain. Ensuring an utmost level of safety. Reducing environmental impacts and achieving sustainable operations. The transformative digital solution, Mine Operations Management, is composed of eight work packages, split across four domains, namely: Data Management, Material Reconciliation, Operational Control, and Assets Performance. These domains help generate valuable insights from integrated operational data for rapid and informed strategic decision-making. The Data Management consists of Master Data Model and Integration Framework packages essential for material tracking, stockpile management, task and workforce management, machine performance, and asset maintenance. It enables users to manage master data objects such as Site, Material, Location, Equipment, and Operator through manual data entry or third-party source systems. With this, mining companies can ensure efficient and integrated management of critical data required for seamless operations. Material Reconciliation, on the other hand, consists of Material Tracking and Stockpile Management packages. Material Tracking enables us to track material movements across different stages, i.e. from the least accurate grade estimated in geological model to the most precise information on shipped material quantity and quality, to account for any inaccuracies. While in the Stockpile Management, users not only can calculate daily stockpile balance, add Survey or Sampling data, analyze inventory levels and trends, create graphical representation of the stockpile balances and movements, calibrate stockpile using volumetric survey and sampling, enables comparison of different models, track movement genealogy and review stockpile slices for stockpiles with LIFO and FIFO calculation type but can create a different type of analysis such as actual vs plan vs model. In the upcoming article, we will explore the two remaining domains of Mine Operations Management to where assigning operational tasks, tracking compliance to plan, monitoring equipment down to workers’ performance are feasible in the mining operations. To know more about MOM, mining innovations and solutions, contact Dassault Systèmes Value Solutions Partner: Paramina Earth Technologies Inc. through firstname.lastname@example.org References: Make it happen for mine execution excellence: Dassault Systèmes®. MEGATrends. (n.d.). https://events.3ds.com/make-it-happen-for-mine-execution-excellence Dassault Systèmes. (2021, August 12). Digging deeper: The virtual solution for Mining Operational Excellence. Dassault Systèmes. https://discover.3ds.com/virtual-mining-operational excellence dassault3ds. (2022, June 16). The mining industry needs to adapt, but how? Dassault Systèmes blog. https://blog.3ds.com/brands/delmia/the-mining-industry-needs-to-adapt-but-how/
Philippine Resources - May 22, 2023
Customer’s First Choice: Sandvik Philippines Delivers 11th and 12th Pantera DP1500i Drills to Filminera Resources Corporation
Sandvik Philippines has successfully commissioned and delivered to loyal customer Filminera Resources Corporation (“Filminera”) their 11th and 12th Pantera DP1500i Top-hammer Surface Drills last 25 January 2023 at the Masbate Gold Project (MGP) located in Masbate Island, Philippines. Photo shows Sandvik Technician Larry Lugnas (second from left) and Service Operations Manager Jorge Cabello (third from left) handing over the drills to MGP representatives. Located 360 km southeast of Manila, the Masbate Mine is operated by Filminera, the Philippine subsidiary of TSX- and NYSE-listed B2Gold with headquarters in Vancouver. In 2022, the mine produced a record-setting 212,728 oz of gold out of 7.93M tonnes of ore milled at an average grade of 1.11 g/t. B2Gold also operates the Fekola Mine in Mali and the Otjikoto Mine in Namibia. Their projects under development include the Anaconda Area in Mali and the Gramalote JV Project in Colombia. The Masbate Mine started operating in 2008 initially using 4 x Atlas Copco ECM660 Drills owned and operated by the erstwhile mining contractor, Leighton. When the opportunity for re-fleeting came about in 2012, Sandvik succeeded in winning the tender which came packaged with a full maintenance contract for 24,000 service meter hours of five years. Ironically, the said maintenance contract almost led to the cancellation of the order for the first 4 x DP1500i due to a dispute with the rates. Eventually, both Leighton and Sandvik were able to arrive at a mutually acceptable arrangement, and Sandvik ran the service contract for five years without incurring penalties in the availability guarantees. The contract was so profitable, Sandvik even had to share some of the residual profit at the end with Filminera under the pain-and-gain proviso of the contract. The next re-fleeting opportunity came in 2017, with the Masbate Mine. This time, there was no service contract attached to the equipment and Leighton was no longer the mining contractor; the mine has shifted to owner-miner operation. Sandvik managed to secure the repeat order for another batch of 4x DP1500i, banking on the proven performance and reliability of the first four. That brings the total to 8 units. Drill numbers 9 and 10 were ordered in July 2020 and delivered in 2021. Numbers 11 and 12 in the photo above were ordered in January 2022 and are now handed over to the customer. Filminera ordered two more DP1500i’s in November 2022; these machines are now awaiting completion in Tampere, for delivery later this year. That should bring the total to 14 x DP1500i units spread over 11 years for our most loyal Pantera DP1500i customer in the Philippines – Filminera Resources Corporation!
Place your Ad Here!
Place your Ad Here!