"These are technical issues that we are going to clarify, at the same time, we are finalizing the terms of reference for any bidder, particularly the financial and technical qualifications," the energy chief said.

After the first ‘black eye’ they have gotten from the initial farm-out deal of the Camagao-Malampaya Oil Leg (CMOL) project, it was gathered that both the energy department and Philippine National Oil Company (PNOC) are now exercising extra restraint as they craft the terms of reference for the targeted auction next year.

Lotilla previously told media that they are targeting first quarter of 2007 for the bidding, but that timeline would depend on how fast they can set in place an acceptable terms of reference that shall take its cue from the controversial Executive Order 556.

On technical concerns that the gas reserves tend to decline for every year of delay in the project, the energy secretary noted that they are taking all those into account as they set the framework for the project’s implementation.

"The government is very aware of that, that is why we are trying to launch this bidding process in the soonest possible time," he stressed.

A Malacañang-issued Executive Order 473 has laid down a policy that PNOC shall take the lead in developing the oil rim. It is also tasked to tap a partner for such venture.

Yet at this point that the government seems to be running out of time just to sort out the bidding concerns alone, even technical experts doubt that when they can finally extract out the oil, it would still be as substantial as expected.

The other contention is that oil prices may already be dropping to a level then that may not be commensurate to the magnitude of investments forked out by projects sponsors.

It would be noted that with the aggressive drilling activities being undertaken in various oil-rich countries, there have been forecasts that oil prices may drop by 2010 in view of surplus in refining capacity.

The development cost of the CMOL project by original proponent Mitra Energy Ltd. is placed at $ 450 million for an estimated reserves of 21 to 40 million barrels of oil.

Previous efforts to develop the oil field were abandoned by the same consortium that develop the Malampaya gas field.

In view of that development, the government opted to offer the project to other parties, with the state-owned PNOC taking the lead in tapping private sector investors as partners.

But while a farm-out deal is the normal course of awarding partnership contracts for oil and gas exploration ventures, Malacañang changed the process and instead mandated that a competitive bidding be undertaken.