BHP calls force majeure on Philippines exploration

3rd May 2013 By: Esmarie Iannucci - Creamer Media Senior Deputy Editor: Australasia

PERTH (miningweekly.com) – Diversified giant BHP Billiton has declared a force majeure on its Palawan permit, known as SC55, off the shore of the Philippines.

BHP, which holds a 60% stake in the permit, told joint venture partner Otto Energy that the declaration came amid a delay in the receipt of the strategic environmental plan clearance for SC55 from the Palawan Provincial Council for Sustainable Development.

Otto Energy said that the clearance was initially expected in September of last year, but the provincial board had requested BHP to submit a socioeconomic development programme to the province, prior to recommending an endorsement of the environmental clearance.

The socioeconomic development programme was not required under Philippine law, nor had it been required for exploration approvals in the past, Otto said.

BHP had issued the force majeure notice until the strategic environmental clearance had been received, in an effort to preserve all its permit rights.

“The effect of issuing the notice of force majeure is to suspend the obligations under the current fourth sub-phase of SC55, including the drilling of the Cinco-1 well, and to preserve the remaining time under the exploration period of SC55 until the environmental clearance is received,” Otto said in a statement on Friday.

Following the receipt of the environmental clearance, BHP was expected to finalise securing an appropriate deep-water drilling rig in order to undertake drilling of the Cinco-1 well.

The SC55 is estimated to host some 2.2-trillion cubic feet of gas.