PROVIDING ADDITIONAL GUIDELINES FOR A TRANSPARENT AND COMPETITIVE SYSTEM OF AWARDING SERVICE/OPERATING CONTRACTS FOR COAL AND PETROLEUM PROSPECTIVE AREAS AMENDING FOR THIS PURPO…

WHEREAS, on April 2, 2009, the DOE issued Department Circular No.
DC2009-04-0004 providing for investment promotion and public contracting
rounds for awarding geothermal, petroleum and coal service/operating
contracts;

WHEREAS, under Republic Act No. 9513, otherwise known as the
“Renewable Energy Act of 2008”, geothermal energy has been considered as
a renewable energy and shall be under the direct supervision and
implementation by the Renewable Energy Management Bureau (REMB);

WHEREAS, the DOE issued Department Circular No. DC2009-07-0011
providing for the guidelines governing a transparent and competitive
system of awarding Geothermal RE Contract, partially superseding
Department Circular No. 2009-04-0004 with regard to provisions involving
geothermal areas;

WHEREAS, Department Circular No. DC2009-04-0004 does not cover
petroleum and coal areas not offered or offered but without qualified
proponent in the previous public contracting rounds but are deemed
potential areas for exploration and development by foreign and local
investors who are willing to apply for a Service Contract or
CoalOperating Contract on these areas;

WHEREAS, due to the increasing cost of imported crude oil and coal
which imposes an unduly heavy burden on the country’s international
reserves, there is a need to actively pursue the exploration,
development and utilization of indigenous petroleum and coal resources
through public contracting rounds by nomination/publication for
petroleum and coal areas not offered or offered without qualified
proponents in the previous Philippine Energy Contracting Rounds (PECR)
but are deemed by foreign and local investors to be worth exploring and
developing.

NOW, THEREFORE, in consideration of the aforementioned premises, the
following amendments and additional provisions to the Circular shall
govern the contracting rounds by publication or direct negotiation for
the purpose of awarding petroleum service contracts and coal operating
contracts.

SECTION 1. Section 3 of the Circular is amended to
read as follows: “

Section 3.a Public Contracting By Nomination/Publication.

a.1 Nomination Period

Official nomination by prospective applicants for petroleum or coal
areas shall commence forty-five (45) calendar days from the opening of
the proposals submitted for the regular PECR. The Department reserves
the right to suspend the period for public contracting for
nomination/publication in preparation for the next regular PECR.

a.2. Nomination of Prospective Areas by the Applicant/s

a.2.1 Applicants for petroleum or coal service/operating contract/s
shall formally nominate the area/s of their interest for the DOE’s
consideration. Before the application is accepted for the DOE
consideration, the following shall be submitted:

a. Technical Description of the nominated area/s
b. Certification of Non-Overlap of nominated area/s with existing
contract/nominated area/s from the Information Technology Management
Services (ITMS) of the DOE.
c. Certification from the Department of Environment and Natural
Resources (DENR) and/or Local Government Units (LGU) that the nominated
area/s is/are not within a Protected Area/s.

a.2.2 The Energy Resource Development Bureau (ERDB) shall within
fifteen (15) working days from receipt of the nomination with complete
documents shall recommend for approval the opening of the subject area
for public contracting round by publication to the Secretary, through
the concerned Undersecretary.

a.2.3 Upon approval by the Secretary of the nominated area/s for
public contracting round by publication, the ERDB shall, within fifteen
(15) working days from receipt of approval, prepare the contracting
round documents with a description of available data and prospects on
petroleum and coal resources in the area applied for.

The proponent, in coordination with the DOE, shall, at its own
expense, cause the publication in two (2) newspapers of general
circulation the nominated petroleum or coal area.

The items for publication shall include, among others, the following:

a. Timeline for the contracting round by publication:

Publication Date – Day 1

Deadline for the Submission of Documents by Applicants – Day 1 plus
29 calendar days on or before 3pm (for coal) and Day 1 plus 89 calendar
days on or before 3pm (for petroleum)

Opening of Documents – Day 1 plus 30 calendar days (for coal) and Day
1 plus 90 calendar days (for petroleum)

Evaluation of Documents – Thirty (30) to Sixty (60) working days for
coal and Forty five (45) to Ninety (90) working days for petroleum

Notice to Qualified Applicant – Five (5) working days from approval
by the Department

b. Location Map and Technical Description of the area/s^*;

^* areas to be nominated for coal and petroleum shall conform to existing coal and
petroleum blocking systems:

Coal : Minimum area for nomination = 2 coal blocks

(1 coal block = 2 minutes of latitude by 1 ½ minutes of
longitude with an area of approximately 1,000 hectares)

Petroleum: Onshore : Minimum area for nomination = 50,000 has.;

Maximum = 750,000 has.


Offshore : Minimum area for nomination = 80,000 has.;

Maximum = 1,500,000 has.


(1 petroleum block = 4 minutes of latitude by 3 minutes of longitude
with an area of approximately 4,000 hectares)

c. List of documents that should accompany the application;

d. Other information that the DOE-CNP deems appropriate.

a.2.4. Interested parties for the contracting round by publication on
petroleum and coal areas shall submit to the ERDB Director the complete
set of documents for evaluation by the DOE-CNP as specified in Section
1.4 (a-d) in the Department Circular No. DC2009-04-0004 and the
published guidelines referred to in 3a.2.3 of this Circular. The
procedure in Section 1.5, 1.6 and 1.7 as indicated in Department
Circular No. DC2009-04-0004 shall be followed.

Section 3.b Direct Negotiation.

Direct Negotiation shall be allowed only in the following instances,
subject to confirmation by the ERDB:

b.1 Frontier Areas – Frontier areas as defined in the Department
Circular No. DC2009-04-0004 and as determined by the DOE-ERDB.

b.2 When, during the conduct of PECR, any of the following
circumstances exist:

i. No proposal is received by the ERDB;

ii. No one among the applicants was able to meet the minimum
requirements after the CNP evaluation.

b.3 When no proposal other than the proposal by the qualified nominee
under Section 3.a of this Circular is received by the ERDB.

Proponents who nominated area/s for inclusion under the regular
PECR but failed to submit a proposal/application shall be disqualified
for direct negotiation under Section 3 (b.2) of this Circular on the
same nominated area/s.”

SECTION 2. Disclaimer. -Proponents/applicants
warrant that it shall not undertake proceedings of whatever kind
against DOE, its officers, employees for any and all acts, resolutions
or decisions of the CNP, except where such acts, resolutions or
decisions violate applicable laws, or if any member of the CNP acted in
evident bad faith, with willful misconduct, or gross negligence.

SECTION 3. Separability Clause -If for any
reason, any section or provision of this Circular is declared
unconstitutional or contrary to law, such parts not affected shall
remain in full force and effect.

SECTION 4. Amendatory Clause – The
provisions of Department Circular No. DC2009-04-0004 and all other
department circulars, which are inconsistent with the provisions of this
Circular are hereby amended or modified accordingly.

SECTION 5. Effectivity. -This Circular
shall take effect immediately after publication in at least two (2)
newspapers of general circulation and shall remain in effect until
otherwise revoked.

Adopted: 24 March 2010

(SGD.) ANGELO T. REYES
Secretary