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As I See It

Foreign oil firms cheating us out of gas royalties

/ 10:38 PM December 20, 2012

It is not only individuals who perpetrate financial larceny and it is not only the ignorant who are their victims but also big international corporations whose victims include the Philippine government. I am referring to the Malampaya gas project in Palawan.

Two foreign oil companies, Shell and Chevron, are cheating our country out of revenues from the Camago-Malampaya gas project under a service contract that not only gives them a bigger share of the profits but also siphons most of the government’s share into their own pockets.

Under Service Contract 38, Shell and Chevron, as principal contractors, each own 45 percent of the project, or a total of 90 percent, while the government, through the Philippine National Oil Company Exploration Corp., (PNOC-EC) owns a measly 10 percent.


Because they own the controlling shares of the project, Shell and Chevron have been making decisions inimical to the interest of the Philippine government. They have been able to commit these crimes with impunity because under the contract, all expenses are deducted from the royalties due to the government under a dubious cost-recovery provision.

Shell and Chevron have been undertaking repairs and unnecessary expansion projects funded mostly by revenues due to the Philippine government. The funds actually go to the coffers of the two foreign firms under contrived and dubious service and supply contracts with other foreign firms acting as their fronts, or dummies.

A few days ago, Shell and Chevron announced an expansion project: the construction of a so-called Depletion-Depression Platform. This will entail another big expenditure that will simply be diverted to the two oil firms.

We recall that the consortium had earlier drilled some 11 wells of which only one well was found dry. Of the other 10 wells, only five were commissioned to supply the natural gas requirements of three gas power plants in Batangas. There is no justification for an extension project as there are still five wells that have yet to be commissioned. There is also no need for a new platform as most of the structures are already at the project site.

Yet even repairs for leaking pipes, which are primarily their fault, are charged by the contractors to the government’s royalties.

We hope that Energy Secretary Jericho Petilla will not be hoodwinked by the consortium into supporting the new venture.

We also recall that last year, Shell and Chevron were able to sway Rene Almendras, Petilla’s predecessor at the Department of Energy, into approving their proposal to drill two additional wells at an astronomical cost of $1 billion, when less than $100 million is needed to drill one. Earlier, the consortium floated the idea of extending the service contract for another 15 years when the existing one still has 13 years to go. When the proposal was roundly criticized, the proponents backed out.

In a privilege speech months ago, Rep. Neri Colmenares pointed out the onerous provisions in Service Contract 38. He called for a congressional investigation to find out how the Philippine government is being cheated by the two foreign oil firms out of the royalties due us. He wants the contract to be rescinded or drastically rewritten.


President Aquino and Congress should review the contract to prevent Shell and Chevron from robbing us Filipinos of our share of the national patrimony.

* * *

Supposedly, the president of the United States is the most powerful person in the world. So why is he afraid of the National Rifle Association (NRA)?

The horrific massacre in Connecticut of 20 grade-school children and six of their teachers by a crazed 20-year-old who then shot himself in the head has renewed calls for restrictions on gun ownership to curb gun violence. Semiautomatic assault rifles can be bought by anybody anywhere in the United States. As a result, mass shootings in America have become common. The Connecticut massacre is already the fourth this year.

Anyone in his right mind sees the urgent need for gun restrictions except the NRA. Even US lawmakers previously opposed to restrictions now favor these. But not the NRA. It has been conspicuously silent on the latest mass shooting.

President Barack Obama, the most powerful man on earth, seems powerless against the NRA, the powerful lobbyist against gun restrictions. Most likely funded and supported by gun manufacturers (many of which, ironically, are based in Connecticut), the NRA is composed of gun fanciers, hunters, and plain gun crazies. Its main weapon is the guarantee of the US Constitution of “the right of American citizens to bear arms.” That provision was written after the war for independence against British colonial rule. The new nation needed armed militia to fight aggressors like the British.

In spite of the many abuses of that right that have resulted in many unnecessary deaths, the constitutional provision has not been repealed or amended. It has become clear that even if that provision is not only obsolete but downright dangerous, it will stay in the US Constitution. No law has been passed by the US Congress to restrict gun ownership. Even the US Congress is afraid of the NRA.

After the latest massacre, President Obama met with his leaders to formulate legislation on gun ownership. But they are vague, or don’t know what they will do. I predict that, as in the past, the Connecticut massacre will be forgotten, as the other massacres are forgotten as soon as the shock and the horror and the furor die down.

During his first presidential campaign, Obama promised gun legislation, but forgot about it during his first term. Will he again forget in his second and last term?

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TAGS: column, Connecticut school shooting, gas royalties, malampaya gas project, National Rifle Association, neal h. cruz, oil firms
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