Cadlao Oil field

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Cadlao oil field expected to begin production in 2013

MANILA - The developers of the Cadlao oil field in offshore Palawan expect to start production next year.

In a report, Cadlao Development Co Ltd and partner VenturOil Philippines Inc said they have started negotiations with a private contractor - Offshore Production Solutions Ltd - for the equipment that will be used to drill the Cadlao prospect.

"Design process system is underway," the report added.

The joint venture is planning to drill two new production wells in the Cadlao field, followed by another one or two additional wells after six months.

The Cadlao field located in offshore Northwest Palawan had previously produced 11 million barrels of oil in the 1980s until it stopped operations in 1991 due to low oil prices at the time.

With its projected resource potential of 5.9 million barrels of oil, Cadlao is considered a "marginal" field because of limited reserves.

Despite this, the field would be ripe for the picking as the current "high oil price environment makes it more economical" to develop it again, according to Energy Undersecretary Jose Layug Jr.

"Marami tayong marginal fields na when oil prices are high, it becomes more economical to draw out the oil," he said.

Compared to its peers in the region, the Philippines' upstream oil and gas industry is relatively small because of the high cost of development along deep seas and the quality of reserves that have been discovered.