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MANILA, April 27 (Reuters) - The Philippines' Energy department on Friday accepted bids for five oil and natural gas exploration contracts and set another tender in July for three other areas, including two near the Reed Bank in the South China Sea which China claims as its own.
A total of 16 bids were submitted in the Philippines' latest, and biggest, energy contracting round involving 12 exploration blocks. But Energy Undersecretary Jose Layug said seven bids had to be rejected due to incomplete requirements, while five sites did not attract any bidders.
He said 38 companies have been prequalified to bid for a total of 15 sites and most were likely interested mainly in the three areas up for grabs in July.
"There's a lot of potential in the Recto Bank," Layug told reporters, referring to the Reed Bank which the Philippines said is within its territory.
The three areas are located near the Malampaya and Sampaguita natural gas fields off the western Philippine island of Palawan. Sampaguita is in the Reed Bank.
"These three areas are near the northwest Palawan basin and they are the most prospective," he said.
Layug was hopeful the contracts will be awarded within the year despite the escalating tensions between the Philippines and China in the South China Sea.
The Energy department has set a 100-day evaluation of the accepted bids.
The Southeast Asian nation is seeking to boost domestic suppy and lessen dependence on costly fuel imports.
Among the prequalified bidders expected to show up in the July tender are Philex Petroleum Corp, a unit of the Philippines' largest gold and copper producer Philex Mining Corp , and Shell Philippines Exploration B.V.
Shell Philippines, a unit of Royal Dutch Shell Plc, has a 45 percent stake in the Malampaya gas project that fuels three major power plants now producing 2,700 megawatts of electricity for the main Luzon island.
Philex Petroleum owns 65 percent of Forum Energy Plc , the London-listed exploration firm that has a 70 percent interest in the Sampaguita gas discovery.
Forum has said the Sampaguita gas field contains more resources than previously estimated, supporting the case to proceed with its $75 million drilling programme in the area.
China claims ownership of the entire South China Sea, including the Spratlys which is claimed in whole by Taiwan and Vietnam and in part by Malaysia, Brunei, and the Philippines.