We publish here an extract from the UKTI’s Asia Pacific Oil & Gas Newsletter which covers several of the countries in the Asia Pacific Region. Information in relation to Oil & Gas in the Philippines compiled by UKTI officers in relevant British High Commissions is included here.

2 big foreign firms eyes Philippines refinery facilities

According to DoE Secretary, Jose Almendras, 2 big foreign firms are eyeing the

Philippines for their refinery facilities. Mr Almendras is promoting the country as a

strategic location for refinery hubs for the Asean market.

Liberated Power Plant opens new natural gas plant in Cebu City

A new natural gas plant was opened in March at Cebu City. The Libertad Natural

Gas Power Plant will generate 1,000 kilowatts of additional power to supply areas in

Cebu. This is the 3rd natural gas plant in the country, the other 2 are the

Malampaya and San Antonio Gasfield. Libertad Power Plant is operated by Forum

Energy in partnership with DESCO Inc.

San Miguel looks at LNG/CNG

San Miguel Power Holdings, one of the biggest players in the local power industry,

is looking at liquefied natural gas (LNG) or compressed natural gas (CNG) for its

planned power facilities. The company has 6 proposed facilities to be set-up in

major areas of the country including Cotabato, Leyte, Panay, Bulacan and Cavite.

Oil exploration to commence at Recto Bank

The Philippine government announced that oil exploration in Recto Bank (Reed

Bank) is commencing this year (2012). As the government stressed, the area is

not part of the territorial dispute amongst Asian countries.

Department of Energy identifies 8 companies undertaking drilling

activities in 2012

The Department of Energy has identified the following companies undertaking the

drilling activities in the country for 2012:

(1) Blade Petroleum for Service Contract (SC) 6 Cadlao Block in offshore

northwest Palawan;

(2) Galoc Production for SC 14C (northwest Palawan);

(3) PNOC Exploration Corp. for SC 37 in the Cagayan Basin and SC 63 in

southwest Palawan;

(4) Gas2Grid for SC 44 in the Visayan Basin;

(5) CIMP for SC 49, also in Visayas;

(6) Frigstad Energy for SC 50 in northwest Palawan;

(7) Pitkin Petroleum for SC 53 in the Mindoro-Cuyo Basin; and

(8) BHP Billiton for SC 54 and SC 59, both within southwest Palawan.

These economic figures and 2012 Outlook have been provided by the Philippine Embassy in London and show that despite the general world economic troubles, The Philippines is continuing to grow with a remarkably good economic outlook.

The Philippine Government has increased the spending on infrastructure projects.

The Philippine Economy

• The Philippine economy grew by 3.7 percent in the fourth quarter of 2011, from 3.1 percent and 3.6 percent in the second and third quarters, respectively.

• The corresponding full year 2011 real GDP growth of 3.7 percent is lower than the 7.6 percent rate of 2010 but within NEDA’s growth forecast of 3.6 to 4.0 percent for the year.

• A myriad of external shocks buffeted the economy since the beginning of the year, starting from the MENA crisis and the resulting high oil prices, the Japan and Thailand tragedies with their resulting supply chain disruptions, and the overall weakness of the world economy due in large part to the weaknesses in the European and U.S. economies. In addition, weather disturbances affected agriculture and infrastructure during the year.

• There was rapid acceleration in public construction expenditure, which grew by 49.4% in the fourth quarter, to make up for government underspending.  The increase was largely due to the government’s Disbursement Acceleration Program as well as the continuous speeding up of the implementation of various government programs and projects.

• The Aquino administration expects the economy to grow by 5 percent to 6 percent in 2012.

Remittances from the UK

These have hit an all time high and in 2011 were just under $1 billion..

         Jan – Dec 2011 (in USD)

2011                                              2010                                      Growth Rate %

956,639,000                                 888,959,000                        7.61

• Also for the first time in history, tourism arrivals from the United Kingdom breached 100,000 in a year, coming in at 104,466 for 2011, 7.78% higher than the registered visitors of 96,925 in 2010

2012 Outlook

• Expect acceleration of public expenditures to continue well into 2012 and beyond, as well as substantial acceleration of disbursements, including those for infrastructure and capital outlay, in the coming months.

• Investment is expected to post a strong growth in 2012 despite the global economic uncertainties, as we anticipate strong investments from both public and private sectors.  The construction sector will get a boost from public construction in 2012 due to continued spending for the government’s Disbursement Acceleration Program’s projects that were carried over from the previous year, and from the faster budget execution process of government. Construction will also get a boost from the acceleration of the implementation of the Private-Public Partnership program this year.

• In addition, expect that private construction will remain robust, particularly in the property sector, given the upward momentum in the office sector, and the relatively high BPO office demand in strategic areas across the country.  Also expect the residential sector to remain supported by the demand from families of overseas Filipinos.

• There is likewise an expected expansion of investments in energy; mining; low-cost housing and office buildings; and the industries in the priority areas – agribusiness, consumer durables, information technology (IT), health and wellness, transport, telecommunications, and especially tourism to contribute positively to the country’s economic growth in 2012.

• The performance of the real estate sector will be complemented by the continued robust performance of the business process outsourcing industries. Meanwhile, the performance of the other services sector will benefit from the surge in tourism as we improve our infrastructure, intensify our tourism marketing campaigns, and maintain a favorable peace and order situation.

• Food manufacturing will benefit from stronger consumer demand spurred by government spending, softening prices of raw materials, and better weather conditions. In the second half of 2012, the manufacturing sector is expected to post a remarkable growth as the food sector further expands, election spending provides an impetus up to the national and local elections in 2013, and the electronic industry registers higher growth.

• On the expenditure-side, the resilient domestic economy will support a continued expansion in household consumption expenditure. Household consumption will be spurred by the continued tripartite efforts of the government, private employers and workers to improve the country’s labor and employment situation; a sustained inflow of overseas Filipinos remittances which has been counter-cyclical in the past; and the implementation of social protection programs.

• While NEDA is optimistic that 2012 will be substantially better than 2011, it remains vigilant and continues to closely monitor external developments that continue to pose significant risk to the country’s growth.   As many analysts expect, global economic recovery might stall in 2012 mainly due to the growing concerns over Europe. The International Monetary Fund projects the Euro area will suffer a mild recession due to lingering concerns on how to appropriately and quickly restore confidence in the economy in order to support growth while at the same time addressing fiscal imbalance and providing more liquidity and monetary accommodation. Similarly, the government is also watching closely developments in the U.S. economy, whether the recovery will gain momentum or will remain fragile. Likewise, the government recognizes the risk that China could slow down or even experience a “hard landing.”