QuestionsQuestions (EXECUTIVE ORDER NO. 80)
It cites Section 2, Article XII of the 1987 Constitution, declaring that all minerals, petroleum, and other natural resources are owned by the State, and that their exploration, development, and utilization shall be under the full control and supervision of the State.
EO 80 references Presidential Decree (PD) No. 87 (Oil Exploration and Development Act of 1972). It generally allows the Government to promote and undertake exploration, development, and production through technically competent and financially capable contractors via service contracts.
Section 11 of PD 87 allows holders of service contracts to assign or transfer their rights by way of farm-in/farm-out contracts upon prior approval of the Department of Energy (DOE).
PNOC EC is permitted to enter into farm-in/farm-out agreements allowing (a) third parties to participate in government-awarded petroleum service contracts to PNOC EC, and (b) PNOC EC to participate in government-awarded service contracts to third parties.
PNOC EC may enter farm-in/farm-out agreements only with reputable, technically competent, and financially capable entities.
EO 80 defines farm-in/farm-out as an industry practice allowing third-party participation to spread risks in oil and gas exploration, development, and production. The entity acquiring the participating interest considers it a “farm-in,” while the entity transferring such interest considers it a “farm-out.”
The selection process must conform to best practices widely adopted in the international petroleum industry, as may be determined by the DOE.
The DOE, in consultation with the GCG, shall issue rules and regulations specifying the selection process. The DOE and GCG must closely monitor compliance.
It requires incorporating existing government selection procedures that enhance transparency and objectivity, including GCG issuances requiring review by the Office of the Government Corporate Counsel for contracts entered into by GOCCs.
They only take effect upon approval of the DOE, after the Department finds that all aspects of the agreement, including third-party qualifications and the selection process, comply with PD 87, EO 80, and other applicable laws and issuances.
PNOC EC must observe sound business judgment and exercise extraordinary diligence, with paramount consideration to the national interest, in entering into the contemplated commercial contracts and arrangements.
EO 80 directs the DOE to submit regular reports to the President on the implementation of the Order, with a copy furnished to the GCG.
All departments, bureaus, offices, agencies, instrumentalities of the Government, including GOCCs and government financial institutions, are directed to extend such assistance and support as may be necessary for successful implementation of the Order.
EO 80 repeals Executive Order No. 556 (s. 2006) and all other executive issuances, rules and regulations, or parts thereof inconsistent with EO 80, which are repealed, amended, or modified accordingly.
It provides that if any provision of EO 80 is declared invalid or unconstitutional, the other provisions unaffected remain valid and subsisting—helping preserve the enforceability of the remaining provisions.
It takes effect immediately upon publication in the Official Gazette or in a newspaper of general circulation.