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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)
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Philippine Resources - November 11, 2022
House forms TWG for bills on dev't of PH natural gas industry
Photo credit: BusinessWorld The House Committee on Energy on Thursday formed a technical working group (TWG) to discuss the proposal to pursue the development of the country's natural gas industry, which is a legislative priority of President Ferdinand R. Marcos Jr. In his opening remarks, committee chair and Marinduque Rep. Lord Allan Velasco said the priority legislative measure would provide a framework for the development of the natural gas industry in its transition from an emerging to a mature industry, promote a competitive natural gas market and define responsibilities of various government agencies and private entities in furtherance of the national goal. Velasco said the Philippines still lacks a clear, comprehensive and integrated legislative framework that would serve as a pillar toward achieving the rapid development of the country's natural gas sector. "The lack of such clear policies is detrimental to the thrust of the Department of Energy to attract foreign investors to invest in our natural gas potentials or importation or transmission of the same," he said in the bill's explanatory note. He said the passage of the bill would promote natural gas as a safe, environment-friendly, efficient and cost-effective source of energy. It would also create favorable conditions to establish a natural gas industry serving all segments of the nation’s population in different sectors of the economy, he noted. He said the bill would promote the development of the Philippines as a liquefied natural gas trading and transshipment hub within the Asia-Pacific region. The panel held initial deliberation on eight measures, seven of which would promote the development of the Philippine downstream natural gas industry, while the other proposal would provide for the national energy policy and framework for the development and regulation of the Philippine midstream natural gas industry. The panel nominated Committee on Energy Vice Chair and SAGIP Party-list Rep. Rodante Marcoleta to head the TWG. Article courtesy of the Philippine News Agency
Philippine Resources - August 31, 2022
Palace to study possible PH-China joint exploration on WPS
Photo credit: Inquirer Philippines The Marcos administration will study the proposed joint oil exploration between the Philippines and China in the resource-rich West Philippine Sea (WPS), Malacañang said on Tuesday. “Pag-aaralan po natin sa ngayon (As of now, we will study it),” Press Secretary Trixie Cruz-Angeles said in a Palace press briefing. Cruz-Angeles’ statement was issued after former Chinese ambassador to the Philippines Liu Jianchao expressed optimism about the revival of negotiations on China’s possible joint oil and gas exploration with the Philippines in WPS. Liu, the current minister of the International Department of the Communist Party of China’s (CPC) Central Committee, hoped Sunday that the Marcos administration will consider joint oil and gas development in the busy waterway. Cruz-Angeles said the Department of Foreign Affairs (DFA) will look into the proposal to jointly explore energy resources in WPS. “Ukol sa mga foreign relations natin, lalung-lalo na those involving contracts kailangan pa po ng abiso ng ating Department of Foreign Affairs (With regard to our foreign relations, especially if these involve contracts, the Department of Foreign Affairs needs to be notified),” she said. Chinese Ambassador to the Philippines Huang Xilian on July 27 said China is ready to restart talks on oil and gas exploration with the Philippines. In November 2018, the two countries signed a memorandum of understanding (MOU) on joint oil and gas development in WPS. The Philippines, under the Duterte administration, terminated the talks before Marcos assumed presidency on June 30 because of constitutional constraints and issues on the country’s sovereignty. The Philippines on July 12, 2016, won its petition against China before the Permanent Court of Arbitration (PCA) in The Hague, Netherlands after the court invalidated Beijing’s supposedly historic rights over nearly the entire South China Sea, including the WPS. Despite the Philippines’ historic win, China has repeatedly ignored the 2016 PCA ruling. By Ruth Abbey Gita-Carlos Article courtesy of the Philippine News Agency
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
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Philippine Resources - January 30, 2023
PHILEX MINING GEARS UP FOR EXPANSION, SIGNIFIES INTEREST IN MACAWIWILI
In photo at the signing of the term sheet between PMC and MGMDCI were: (seated, left to right) Felicisimo A. Feria, Jose Ma. S. Lopez, and Michael L. Escaler, all representing MGMDCI; Manuel V. Pangilinan, Philex Chairman; and Eulalio B. Austin Jr., Philex President and CEO; (standing, left to right) Atty. Katrina Janine Sta. Ana, Associate, Migallos & Luna Law Offices; Atty. Bryan George Manzano, Associate, Migallos & Luna Law Offices; Atty. Michelle Carisse Balois, Partner, Feria Tantoco Daos Law Offices; Atty. Daneia Isabelle Palad, Partner, Migallos & Luna Law Offices; Atty. Winston Cruz, Vice-President and General Counsel, Philex Mining Corporation; Romeo B. Bachoco, Senior Vice-President and Chief Finance Officer, Philex Mining Corporation; Atty. Marilyn A. Victorio-Aquino, Director, Philex Mining Corporation; Atty. Barbara Anne C. Migallos, Director and Corporate Secretary, Philex Mining Corporation and Partner, Migallos & Luna Law Offices; Atty. Raymond Francis Jamora, Associate, Feria Tantoco Daos Law Offices; and Atty. Michael John Tantoco, Jr., Associate, Feria Tantoco Daos Law Offices. (PMC photo) Philex Mining Corporation, one of the oldest and largest copper and gold producers in Southeast Asia, recently set into motion its plans for expansion with the signing of a Term Sheet with Macawiwili Gold Mining and Development Co., Inc. (“MGMDCI”) in simple ceremonies in Makati City. Macawiwili Gold Mining and Development Co., Inc. is a 90-year old company engaged in mineral exploration and production in Itogon, Benguet. With over 800 hectares of contract area under its Mineral Production Sharing Agreement, the Company has been exploring various mineral deposits, including gold and copper, for several decades. The Term Sheet outlines the parties’ clear intentions to explore commercial, financial, and technical avenues in preparation for possible shares acquisition by the Company in MGMDCI. Activities to kick off this partnership will include conduct of due diligence and scout drilling activities on the property of MGMDCI covered by Mineral Production Sharing Agreement (MPSA) in Itogon, Benguet Province., located adjacent to the existing Padcal Mine of the Company. Signing the Term Sheet on behalf of the Company were Manuel V. Pangilinan, Chairman, and Eulalio B. Austin Jr., President and CEO; while representing the shareholders of MGMDCI were Michael G. Escaler, Jose Ma. S. Lopez, and Felicisimo A. Feria. The signing was also witnessed by directors and officers of the Company as well as counsel for both parties. “Our interest to pursue investments in the Macawiwili property” according to Eulalio B. Austin, Jr., President and CEO, “is part of our business direction for this year to broaden interest in ‘green metals’ through mergers and acquisitions.” “We need to hit the ground with this at the soonest possible time,” Austin adds, “considering that this property is adjacent to our Padcal mine and would go a long way in fulfilling company plans for expansion and extension of the life-of-mine of Padcal. “This is a good addition or extension to the Padcal Mine,” according to Manuel V. Pangilinan, Philex Chairman. “I hope that this is the start of something good and that it would ride the wave of higher metal prices in gold and copper.” Pangilinan emphasized that “any addition, expansion, or extension to the Padcal Mine would greatly benefit not just our employees and their families, but also our host and neighboring communities, and our nation as a whole.” Article courtesy of the Philippine Stock Exchange
Philippine Resources - January 30, 2023
DMCI Holdings, SMPC among best governed PLCs
Photo caption (left to right): SMPC Corporate Governance and Compliance Manager Joseph D. Susa, DMCI Holdings Board Advisor and SMPC Independent Director Honorio O. Reyes-Lao and SMPC SVP, Chief Risk, Compliance and Performance Officer Junalina S. Tabor. Diversified engineering conglomerate DMCI Holdings and its energy subsidiary Semirara Mining and Power Corporation (SMPC) were among the Philippine listed companies recognized for their corporate governance performance by the Institute of Corporate Directors (ICD). DMCI Holdings received the 2 Golden Arrow recognition while SMPC was awarded the 3 Golden Arrow recognition. Both have been ASEAN Corporate Governance Scorecard (ACGS) Golden Arrow awardees since 2019. The awards were conferred after the two companies exhibited observable conformance with the Philippine Code of Corporate Governance and internationally recommended corporate governance practices as espoused by the ACGS. The ACGS measures the performance of the companies in the areas of facilitating the rights and the equitable treatment of shareholders, how they relate to their different stakeholders, ensuring transparency and accountability through timely disclosure of material information, and how the board guides the company strategically, monitors the management, and ensures the board’s accountability to the company and the shareholders. Over 80 Philippine listed companies were feted during the in-person awarding ceremony in Sheraton Manila Hotel last January 20. Article courtesy of the Philippine Stock Exchange
Philippine Resources - January 30, 2023
DOTr to prevent more delays in PNR Clark Phase 2 project
Photo credit: DOTr The Department of Transportation (DOTr) will work closely with the contractor of the Philippine National Railways (PNR) Clark Phase 2 project to ensure that issues are addressed after its projected completion date was delayed by eight months. In a statement on Monday, the DOTr said the project, initially slated for completion in June 2024, has been delayed until June 2025 due to the delay in the turnover of the land to project contractor POSCO Engineering & Construction. “Before the 36-hectare site was turned over by the government to POSCO, several fruit-bearing trees were cut down, causing the delay,” it said. About 48 buildings and facilities are expected to be built by POSCO at the project site, meant to be the Clark Depot of the North-South Commuter Railway (NSCR). “As of December 31, 2022, more than 33% of the planned construction has been completed,” it said. In addition to buildings and facilities, the Clark Depot will have 33 stabling tracks to serve as the parking areas for the trains and 12 other tracks to access maintenance facilities. During a site visit at the project site, DOTr Secretary Jaime Bautista said the Clark Depot is where the operations control center will be located which will serve as the “heart of operations” of the rail service. “It is important that we complete this as planned and on time. I know that there are issues that need to be resolved. The DOTr will work closely with [the contractor], so we can fix problems and address issues,” Bautista said. The 53-kilometer PNR Clark Phase 2 is the second leg of the NSCR and will link multiple cities and municipalities in Central Luzon with Metro Manila. Funded by the Asian Development Bank, the project is seen to cut travel time between Malolos City in Bulacan province and Clark, Pampanga province from 1.5 hours to 30 minutes. This part of the NSCR also includes the Airport Railway Express Service that will connect Makati to the Clark International Airport through a 55-minute train ride. Article courtesy of the Philippine News Agency
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