Australian firm Gas2Grid, who has been conducting oil drilling in the Philippines, has formally announced the approval by the Energy Department of its application to declare the Malolos-1 oil well on the shore of the province of Cebu as an “oil discovery.”

“The company advises (announces) that the Philippine Department of Energy has formally recognised Malolos-1 as an oil discovery and approved an extension of SC [Service Contract] 44 in order to conduct oil production with the aim of establishing a commercial oilfield,” Gas2Grid said in an announcement.

Earlier Gas2Grid managing director Dennis Morton said application for declaration of an oil discovery is the first step in appraising and developing the Malolos oilfield.

News from official sources further adds that the company will provide an additional minimum period of 12 months to flow test the well and establish commercial production. Following the completion of that work and with the DOE’s approval of commercial status, the Malolos oilfield will enter a 25 year production phase.

Morton added that available technical data also indicated the possibly that Service Contract 44 “is much larger Malolos oilfield than initially assessed.”

Service Contract 44, covers 750 square kilometres in central Cebu.

Gas2Grid successfully perforated and flow tested two oil bearing sandstones in Malolos-1.

Should the discovery go into full production, it will become far more profitable as it sits very close to land, making oil extraction easier and requires less investments. It will obviously have an impact on oil prices, in a positive way.