The resolution was passed unanimously by the Upper House during its recent session.
Senator Paul Ueki introduced the resolution based on findings that because of limited investments on the project, Palau stands to receive only a little amount from companies that will exploit the oil and natural gas reserves in the area.
Under an agreement recently signed between Palau and the Palau Pacific Energy (PPE), Palau only stands to receive the standard gross revenue tax of 4 percent. Kayangel State, on the other hand, would be receiving 12. 5 percent royalties under the same agreement.
The resolution disclosed that considerable scientific research has been done to establish that the Palau North Block within the Velasco Reef may have commercially feasible quantities of oil and gas.
However, it stressed that the actual presence of the natural resources cannot be confirmed until test well drilling, at a cost of $15 million, has been conducted.
“The drilling of test wells could facilitate significant income potential for the national government over a long term, in that the confirmed presence of oil or gas resources would enable Palau to solicit and enter into future drilling contracts with more competitive and lucrative terms,” the resolution pointed out.
“If the Republic of Palau is able to secure funding for this drilling of test wells, it can assume majority ownership of the project and receive a majority of the net revenues,” it added.
The resolution says that it would not be hard for the government of Palau to find the “right” lending institution to help it in such project.
It pointed out that there are many international sources of funding available that could allow the Republic to obtain majority ownership and receive a larger share of the profits from any oil or natural gas recovered from the Velasco Reef.
With its great potential, the resolution says that the Palau government should be more involved in the project.
“The potential income for the Republic of Palau from the exploration of natural resources such as oil and gas within its exclusive economic zone would be sufficient to ensure the Republic’s financial independence and stability,” the resolution concludes.
Aside from Pres. Toribiong, copies of the resolution will also be transmitted to Senate President Mlib Tmetuchl and House of Delegates Speaker Noah Idechong.
