The Philippines began in 2001 producing an average of only 1,000 barrels per day (bbl/d) of crude Oil. In 2002, however, Crude Oil production averaged nearly 24,000 bbl/d, and has been steady at 25,000 bbl/d since 2003.  This increase was due primarily to the development of new deep-sea oil deposits beneath the Natural Gas-bearing structures in the Malampaya field. The increased production volume is still modest, however, in relation to the countrys needs.
The Philippines consumed 333,000 bbl/d on average in 2004, with net oil imports of 307,000 bbl/d. This dependence on imported oil makes the Philippine economy vulnerable to sudden spikes in world oil prices. Oil consumption is relatively stable, despite the countrys economic growth, due to reduced reliance on oil for electric power generation following development of the Malampaya natural gas deposit.
In October 2001, exploration underneath the Malampaya gas field revealed an estimated 85 million barrels of oil. Shell Philippines Exploration (SPEX) has committed about $2 billion to the Upstream components of the combined oil/natural gas project, currently operating the joint venture with partners Texaco Philippines and the Philippines National Oil Company (PNOC). Production currently is around 25,000 bbl/d. In addition, six new offshore exploration projects have commenced in the Malampaya basin, led by Nido Petroleum, Philippines National Oil Company Exploration Corp., Trans-Asia Oil, Unocal Corp., and Philodril. In June 2004, however, Shell and ChevronTexaco announced that they had determined the amount of oil in the vicinity of Malampaya to be too small to develop economically, and relinquished their development rights. The Philippine government is seeking other firms which may be interested in developing the reserve, but no agreements have been concluded.
Petronas was awarded a contract in January 2005 for exploration in the Mindoro Basin. After initial seismic survey work, the company plans to drill at least one exploratory Well. Nido Petroleum was awarded a contract for exploration off the northwest coast of Palawan in August 2005. The company expects to begin exploratory drilling in 2006. Bids on four additional blocks were solicited by the Philippine Department of Energy in September 2005, due by the end of November.