5.000
%
Neutral
106
mm boe
19
%
The Philippines' service contract has been widely accepted, and a new gas discovery near Malampaya in 2025 is encouraging. However, political feuding and the flood-control corruption scandal, together with tensions with China in the South China Sea, remain headwinds. Outlook maintained because encouraging exploration is offset by political and maritime risks. Outlook: Neutral. Risk premia unchanged at 5%.
October 7, 2026
Asia - Pacific
mm bbl
bcf
Southeastern Asia, archipelago between the Philippine Sea and the South China Sea, east of Vietnam.
PSC/PSA
The upstream terms in the Philippines are called service contracts. Unlike service contracts in other countries, where the contractor receives a fee from the national oil company but has no rights to production, the Philippine system is, in practise, a simple production sharing contract. There is no royalty, a fixed cost recovery ceiling and production sharing splits. Corporate income tax is paid on behalf of the contractor by the Government.
President Ferdinand Marcos Jr. faces a feud with the Duterte camp, deepened by Rodrigo Duterte's surrender to the ICC in 2025, and a major flood-control corruption scandal. Tensions with China in the South China Sea persist. US and UK guidance cite the liberalisation of foreign ownership limits and the CREATE MORE tax incentives, but note bureaucracy and corruption. The EIA notes that the Malampaya gas field is declining, though a new discovery was made in 2025. The Philippines began importing LNG in 2023 and is reviving plans for nuclear power.
Source: ESRI, Heritage Index, HMG Foreign & Commonwealth Office, US Department of State, International Trade Administration, International Law Review, Ernst & Young, Wood Makenzie & OGA data.
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