Duterte signs EO that rationalizes rules for third-party engagement under petroleum service contracts

(Eagle News)–President Rodrigo Duterte has signed an executive order that rationalizes the rules for the engagement of third-party participants under petroleum service contracts.

Under Executive No. 80 signed on Tuesday, May 28, Duterte allowed the PNOC Exploration Corporation, the upstream oil and gas subsidiary of the Philippine National Oil Company, to enter into farm-in/farm-out agreements.

Farm-in/farm-out refers to a practice that allows “third party participation to  spread the risks inherent in oil and gas exploration, development and production,” the EO said.

In this setup, third parties can participate in the service contracts awarded by the government to the PNOC-EC and the PNOC-EC can participate in the service contracts awarded by the government to third parties.

“In all cases, PNOC-EC shall enter into farm in/farm out agreements only with reputable, technically competent and financially capable entities,” the EO said.

It said the third party selection process to be undertaken by PNOC-EC “shall conform to best practices widely adopted in the international petroleum industry as widely determined by the (Department of Energy).”

“This order shall take effect immediately upon publication in the Official Gazette or a newspaper of general circulation,” the EO said.