Palau Correspondent


KAYANGAL, Palau — Members of the Kayangel State legislature on May 20 gave life anew to the efforts of the Palau Pacific Energy Inc. to drill for the potential of oil at the Velasco Reef, after extending its drilling license.

Former President Johnson Toribiong is assisting the company to get the necessary national permits to start the oil drilling in the Northern state.

According to the resolution adopted by the Kayangel State on May 13, the drilling has not commenced due to the “refusal of the appropriate agencies of the government of the Republic of Palau to honor the requirements prescribed by the Palau Petroleum Act.”

The resolution also stated that COVID-19 restrictions also caused “unavoidable delays” preventing the company from meeting the drilling deadline.

Robert Jordan, president of PPE Inc., said in a letter to Kayangel officials that studies commissioned by the company noted that hydrocarbons have been generated “under the flanks of the Velasco area,” and the drilling will determine if oil and gas deposits are present in the Velasco Reef area of the state waters.

In the May 20 letter, Jordan said his company and associates have invested $3 million to conduct geophysical, geological, geochemical, environmental and engineering studies of the Velasco reef and its surrounding area.

Kayangel State granted Palau Pacific Energy rights to explore, drill and produce oil in the surrounding marine area.
Photo by Richard Brooks

The talks of oil exploration began in the 1970s.

PPE has also asked for several extensions of its licenses, failing to get the final approval to begin the test drilling.

Toribiong said this time the company is optimistic the plan to drill will soon commence.

Jordan said in his letter to the state official, the company will “respect and wish to preserve in our efforts with utmost attention to the environment and maintenance of the waters which provide for the welfare of all Palauans.”

By allowing a shallow test well of less than 4,000 feet, Jordan said it could be determined if hydrocarbons are present in the Velasco Reef.

He reiterated what is needed is a permit under Palau’s regulatory framework and required by the Petroleum Act.

According to Journal files, the National Petroleum Revenue Management and Sharing Act for Palau —which Toribiong signed as president in 2012 — put in place a procedure how proceeds from exploration were to be shared between the national government and the state governments. It also required petroleum operators to publish annually all payments arising from the exploration for transparency purposes. The World Bank had earlier researched and issued a report on the potential for the industry, according to Journal files.

In 2010, Toribiong had advocated for oil exploration, hopeful that might result in cheaper fuel and jobs. Other companies had also shown interest in energy exploration in Palau, but PPE has been consistent. mbj