By Myrna M. Velasco The unsettled P146.8-billion tax case awarded by an international arbitration tribunal to the Malampaya consortium was seen as a major factor dampening investors’ appetite in the country’s upstream petroleum sector, and that had been manifested in the recent contracting round undertaken by the Department of Energy (DOE). Rufino B. Bomasang, chairman of the Petroleum Association of the Philippines (PAP), asserted that while the Malampaya consortium led by Shell Philippines Exploration B.V. (SPEX) won the case in the arbitration court, “there’s still a case pending at the Supreme Court that has yet to be resolved.” Until that is legally ruled upon with finality, he averred that uncertainties still linger and that has not been helping lift investors’ confidence into injecting fresh capital in the country’s upstream petroleum sector. “The sword of Damocles is still the COA question on Malampaya. Until that is resolved, investors will not come in. Why? Because that is the best project that ever happened in this country and yet questions of that sort had been raised,” Bomasang opined. He was referring to the COA opinion that the income tax of the Malampaya contractor should not have been integrated into the calculated royalty share of the government, prompting the State auditor to file its claims against the consortium-developer of the gas field. The arbitral ruling has contradicted COA’s position, hence, the aggregate P146.8-billion award accorded to the Malampaya consortium, which apart from SPEX also includes American firm subsidiary Chevron Malampaya LLC and state-owned Philippine National Oil Company-Exploration Corporation. The Malampaya consortium also argued its position on the case based on the provisions of its Service Contract 38, which sets the exploration an development terms of the project as anchored on the prescriptions of Presidential Decree 87 or the Philippine Oil and Gas Law. Bomasang added the legal triumph of the Malampaya consortium in the International Chamber of Commerce (ICC) of Singapore “just solved 50-percent of the problem, but the other 50 percent is still the Supreme Court.” In the recent bidding round of service contracts under the Philippine Conventional Energy Contracting Program (PCECP) devised by the Duterte administration, the outcome had been considered “less than desired” – because the country failed in attracting deep pocketed and big-ticket players to participate in the auction. Only one foreign player – Israel’s Ratio Petroleum – had been able to put up a bid for an offered block within East Palawan basin. To entice fresh capital flow into the upstream petroleum sector, Bomasang emphasized “the DOE and the DOF (Department of Finance) and even Congress, they all have to agree that we need to find the next Malampaya.” And when that firm position is already taken by these relevant government agencies, he noted that they must also ensure that there should be “stability of policies.” The Malampaya field is the country’s only commercial gas production platform at this point – and it satiates the fuel requirements of more than 3,200 megawatts of power capacity primarily servicing the electricity needs of the main power grid of Luzon.