Preamble
WHEREAS, one of the more important policy decisions in the area of oil and gas exploration and development is the adoption of the service contract system embodied in Presidential Decree No. 87, as amended, also known and cited as the "Oil Exploration and Development Act of 1972 "; WHEREAS, the service contract system which attracted foreign capital and expertise in an area where local resources are not adequate, allows maximum benefits to the Philippine Government and at the same time providing reasonable returns to companies that render financial and technical services and assume all the risk of oil exploration; WHEREAS, while the results from the implementation of the service contract system has so far been encouraging giving the country several hydrocarbon discoveries and three producing oil-fields, it is necessary that we offer improved fiscal and contractual terms to service contractors in order for the Philippines to continue her oil exploration momentum in the light of current world-wide developments that has caused drastic cutbacks in exploration budgets of most exploration companies; WHEREAS, eight (8) exploratory wells have been drilled so far in waters deeper than 200 meters or 600 feet, of which two (2) are discoveries, which give deep-water drilling new significance in Philippine petroleum operations; WHEREAS, there is a need to provide for a new set of incentives to revitalize interest and encourage more drilling activity in our country, with special reference to deep water oil exploration; NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers vested in me by the Constitution, do hereby decree as follows: