The Philippine government has denied it has revoked a contract awarded to a foreign oil company saying there was never a contract in the first place, media reports said Tuesday.

Executive Secretary Eduardo Ermita pointed out that no contract had been offered Malaysian-based Mitra Energy Ltd to take part in the development of oil deposits in the Camago-Malampaya field off western Palawan Island.

In effect "nothing has been rescinded," BusinessWorld quoted him as saying.

Mitra says it secured a preliminary agreement with a unit of Philippine National Oil Co (PNOC), PNOC Exploration Corp, which owns the Malampaya oil rights, on June 1 this year.

But an Executive Order released on August 11 and backdated to June 17 effectively terminated the agreement a move which has raised concern within the foreign investment community.

"The gap between the day the order was signed and its release should not be seen as a delay," BusinessWorld quoted Ermita saying.

"Nothing had been finalized with anybody. It was just reported to the cabinet two weeks ago and the president said we need to undergo bidding," he said.

This is despite the fact that foreign and local firms, including Mitra, tended for the project.

"There is no written contract. We have a piece of paper informing us of the preliminary award to negotiate a farm-in contract. We were negotiating for a farm-in contract and we were supposed to sign on August 25," Mitra project manager Chris Whitmee told BusinessWorld.

Directive

The order, which did not name Mitra included a directive that bars PNOC and other government agencies from sub-contracting out work covering exploration, known as "farm-in," or development, known as "farm-out," in the Camago-Malampaya reservoir.

It said all arrangements entered into by the PNOC "which violate this Executive Order shall be immediately discontinued or cancelled."

"What we find particularly puzzling is the objection to farm-in, farm-out contracts," Whitmee told AFP last week.

"These are the energy sector's benchmark which all oil and gas companies use worldwide."

"Foreign governments and oil companies also use them to attract and obtain partners to join in either an exploration (farm-in) or development (farm-out) of a gas or oil field."

According to BusinessWorld a "preliminary letter of award was issued on May 31, which gave Mitra the go-signal to pursue talks for a farm-in, or exploration, agreement.

The paper said Trade Secretary Peter Favila has defended the move while admitting that he had yet to see the order.