NEWS

By Myrna M. Velasco

The Department of Energy (DOE) has advance notice that the multi-billion Malampaya deep water gas-to-power project will continue operating beyond the 2024 contract lapse with its original consortium-operator led by Shell Philippines Exploration B.V.

Energy Secretary Alfonso G. Cusi said that was the assurance he had given to the Malampaya consortium employees and executives during his recent visit to the gas production platform in Palawan.

“They asked me what will happen after 2024? I told them you will continue to work because we will continue running that (Malampaya gas field),” he said.

The energy chief emphasized the only question that his department is resolving now is “who will be operating the field by then?”

He acknowledged the license extension application of the SPEX-led consortium; and indicated that it is now under the evaluation process of the relevant units of the energy department.

“An extension does not immediately say: okay. It’s going to be evaluated,” Cusi stressed, adding that the application is now being assessed by the team of Energy Undersecretary Donato D. Marcos; who was also with Cusi during the platform visit.

When it comes to recommendation on the propounded Malampaya license extension, Cusi told reporters “there’s nothing yet on my table, there’s a process, so we have to wait for that.”

The Malampaya consortium has repeatedly sounded off that the country’s only commercial gas field could still have an output that will be enough to run the existing 3,200 megawatts of power capacity until 2029 to 2030 – entailing then that it could still have additional 5-6 years life cycle on that scale of production.

However, extraction beyond the Service Contract 38 duration cannot be concretized without the government extending the gas field’s operating license. The prevailing Malampaya contract will expire in 2024.

Marcos had apprised media that they have been exploring at least three options for the Malampaya license extension: One is for the government to hike its stake in the project to a level that will be equal to that of SPEX and Chevron Malampaya LLC (preferably 33.33% equity for each including Philippine National Oil Company-Exploration Corporation); two, the government will takeover the gas field and will just tap a third party technical contractor to operate it; and three; to extend the license of the SC 38 consortium with some adjustments in the terms.

The Malampaya field is not just fueling a significant fraction of the country’s energy requirements, but it is a well-entrenched dollar-earner (primarily on its export of condensate) and it is also injecting massive stream of revenues into the State coffers.

By the end of this month, it is anticipated that the magnitude of revenues already contributed by the Malampaya gas field project to the Philippine government will be reaching colossal US$11.0 billion.

The royalty sharing arrangement for upstream petroleum projects in the Philippines – including the Malampaya field, is at 60:40 ratio in favor of the government – as sanctioned by the provisions of Presidential Decree 87, the law that underpins oil and gas exploration and developments in the country.

Source: Manila Bulletin