QuestionsQuestions (Republic Act No. 387)
The short title of RA 387 is the “Petroleum Act of 1949.”
“Petroleum” includes mineral oil, hydrocarbon gas, bitumen, asphalt, mineral wax, and similar naturally associated substances; it excludes coal, peat, bituminous shale, and other stratified mineral fuel deposits.
No. Exploration and exploitation concessions do not confer ownership of the petroleum lands or deposits; they only grant the right to explore, develop, exploit, and utilize under the law and for the period/conditions stated in the concession.
All natural deposits or occurrences of petroleum or natural gas in public and/or private lands in the Philippines and in territorial waters or on the continental shelf are owned by the State, inalienably and imprescriptibly.
Ownership or the right to use land for non-petroleum purposes does not include the ownership of, nor the right to explore for, exploit, or utilize petroleum or natural gas deposits in, on, or under such land.
Generally discretionary, except for the cases specified in Article 11 where—upon fulfillment of the formalities and requirements—the granting of certain concessions becomes obligatory.
Non-Exclusive Exploration Permit; Exploration Concession; Exploitation Concession; Refining Concession; and Pipe Line Concession.
The concessionaire bears the risk of whether petroleum exists; the Government does not guarantee the existence of petroleum or provide title warranties.
A petroleum reservation is an area set apart for petroleum under a recommendation of the Secretary of Agriculture and Natural Resources, proclaimed by the President with boundaries stated in the proclamation.
No petroleum reservation may be established over any areas covered by an exploration or exploitation application already filed or granted.
Free Areas are lands within the Philippines not within National Reserve Areas, not within Petroleum Reservations, and not covered by valid existing exploration/exploitation concessions or older petroleum rights/claims. They are open to application for Exploration Concession by duly qualified persons.
They include areas previously included in concessions but voluntarily given up or required to be given up, areas whose concessions expired/cancelled, or areas found in excess of maximum areas allowed by the Act.
It allows only surface geological/geophysical investigation; it conveys no right for exploratory drilling and gives no priority that automatically entitles the permittee to exclusive exploration or exploitation in the covered area.
It is for not more than two years and is renewable for another two years at the discretion of the Secretary of Agriculture and Natural Resources.
Year 1: not less than 50 centavos per hectare per year; Year 2: not less than 1 peso per hectare per year; Year 3: not less than 1 peso and 50 centavos per hectare per year; Year 4: not less than 2 pesos per hectare per year.
The concessionaire must pay the difference between minimum required work and actual expenditures. Continued failure to perform necessary exploration work within the area may lead to cancellation of the concession.
The initial term is not more than four years, extendable for up to three years in a first extension and another three years in a second extension; total not more than ten years, with no further renewal allowed after ten years.
Exploitation includes work within the exploitation concession area aimed at producing petroleum, including drilling, pumping/storage, pipelines and other facilities useful for making petroleum available for sale/manufacture/refining/shipment. It excludes manufacturing/refining operations and any work outside the area that is part of a pipeline or special transportation system.
For an Exploration Concession, exclusivity applies during the exploration period. For an Exploitation Concession, the exploitation concessionaire has the exclusive right during the term to drill within the vertical boundaries projected downward of the concession parcel and to extract/utilize substances within those boundaries, subject to the Act and regulations.