WHEREAS, Section 5 of Presidential Decree No. 87, otherwise known as the "Oil Exploration and Development Act of 1972", as amended, provides that "every contract herein authorized shall, subject to the approval of the President, be executed by the Petroleum Board (now Department of Energy) created in this Act, after due public notice, pre qualification and public bidding or concluded through negotiations";

WHEREAS, the current practice of the Department of Energy (DOE) is to grant all petroleum Geophysical Survey and Exploration Contracts (GSEC) and Service Contracts (SC) through negotiations on a "first come, first served basis";

WHEREAS, the DOE desires to change the current practice of granting contract areas freely defined by the Contractor by offering areas predefined by the DOE based on a blocking reference system to facilitate the establishment of the most effective exploration strategy and allow the DOE to evaluate the market value or true value of the acreage that is being offered;

WHEREAS, in order to promote the government's petroleum exploration and development program, there is a need to attract both local and foreign oil industry investments through competitive public contracting rounds in petroleum prospective areas. NOW, THEREFORE, in consideration of the aforementioned premises, the following procedures shall govern the competitive system for awarding petroleum exploration, development and production service contracts: