CAPITAL: MANILA
MONETARY UNIT: PESO
REFINING CAPACITY: 419,500 B/CD
OIL PRODUCTION: 1,200 B/D
OIL RESERVES: 289 MILLION BBL
GAS RESERVES: 2.8 TCF

Phillipines refiners asked the government to defer the second phase of the Clean Air Act, slated to take effect in 2003.

The firms, hurt by rising crude prices, said they could not afford to invest in equipment to reduce the aromatics and benzene content of motor fuels, as mandated under the law.

The legislation called for reduction of the aromatics content in unleaded gasoline to 35% from 45-50%, and reduction of gasoline benzene to 2% from 4-5%, both by 2003. It also called for reduction of diesel sulfur to 0.3% by 2001 and to 0.05% by 2004 from 0.5% in 2000.

Legislators passed the law following studies showing that Manila had a suspended particulate rate five times higher than the World Health Organization's standard.

The oil companies said they had huge losses due to the imbalance between petroleum prices in the domestic market and those in international markets, and couldn't afford investments in upgrading. They included units of Royal Dutch/Shell Group, Caltex Petroleum Corp., and Petron Corp.

The oil companies said they had to pay for crude and product imports in US dollars while selling in the local market in pesos. The peso had been depreciating.

In 2000, product prices rose but remained subject to government control.

Meanwhile, Philippines Energy Sec. Mario Tiaoquiicial urged the 10-member Association of South East Asian Nations (ASEAN) to review its common energy programs.

He urged ASEAN oil exporting nations to help the importers with discounts or special payment programs.

Despite efforts to reduce dependency on imported oil through development

of indigenous energy resources, the Philippines' net oil import bill was $2.3 billion in 1999, or 42% of its trade deficit that year.

Indonesia, Malaysia, Viet Nam, and Brunei were ASEAN's oil exporters, while the Philippines, Thailand, Singapore, Myanmar, Cambodia, and Laos were oil importers.

Tiaoqui proposed that ASEAN oil exporters help oil importers during times of high prices, while net importers could buy ASEAN oil during times of excess supply.

Malampaya field

Shell Philippines Exploration BV and Texaco Inc. were completing work at Camago-Malampaya field off Palawan Island.

A contractor installed a 91,000-tonne concrete gravity substructure in 2000. The 10,500-tonne topsides was due to be placed in the spring of 2001.

Gas production was due to begin in October 2001.

The Camago-Malampaya field was estimated to contain 4 tcf of gas.

A pipeline was being laid from the platform in the South China Sea to the Batangas terminal on the southwestern coast of Luzon, 90 km from Manila.

Shell added oil development to the Malampaya gas project. The 1992 discovery penetrated a 394-m gas column in Nido limestone at 2,956-3,494 m below the derrick floor. Underlying that was a 106 m oil column with 71% average oil saturation.

In early 2000 Shell drilled Malampaya-5, the first of five planned development wells. Estimates were more than 3 tcf of gas reserves, 120 million bbl of condensate reserves, and 250-400 million bbl of crude oil in place. Oil production start was possible in 2001 at 20,000-25,000 b/d.

The Philippines in April started up its first gas-fired power plant south of Manila, running on diesel or condensate until the arrival of gas via pipeline from Malampaya in late 2001.

The $890 million, 1,000-Mw plant was privately owned by a joint venture of BG PLC and Filipino firm First Philippine Holdings Corp.

Saudi Aramco was considering investing $600 million in a naphtha cracker project. It held a 40% stake in the refiner Petron Corp.