The Department of Energy on Monday identified the renewal of the Malampaya service contract as one of the major accomplishments of the Marcos administration that focus on indigenous energy sources for reliable, stable and affordable electricity supply.
The DOE said in a report the Malampaya’s Service Contract 38 extension until Feb. 22, 2039 is a key indicator of progress in the development of the natural gas industry.
It allows full production of the gas field in northwest Palawan through full utilization of its remaining reserves of about 147 billion cubic feet.
The DOE said this would jump start the exploration and development of other fields in the area which reportedly contain up to 210 billion cubic feet more of natural gas.
President Ferdinand Marcos Jr. noted in his 2022 State of the Nation Address the “uncertain policy in upstream gas, particularly in the area close to Malampaya.”
Marcos said this required “clarification of the processes and review of service contract policy.”
The government then took the lead in providing investment incentives by approving the sale of Shell Philippines Exploration B.V.’s 45-percent stake in SC 38.
The DOE report said the approval of the Shell shares’ sale to Malampaya Energy XP Pte. Ltd. on Sept. 30, 2022 “resulted in an all-Filipino consortium now operating the Malampaya Deepwater Gas to Power Project, the largest upstream petroleum operations in the country.”
Prime Exploration Ptd. Ltd. led by businessman Enrique Razon Jr. formalized in July 2022 its purchase of MEXP, which had acquired the Shell shares.
Razon’s Prime Infrastructure Capital Inc., through subsidiary Prime Energy Resources Development B.V., holds a 45-percent operating stake in the Malampaya gas-to-power project.
The extended SC 38 required the Malampaya consortium to explore the area around Malampaya for new wells.
The contract extension also required the consortium to put in place a minimum work program for geological and geophysical studies and to drill at least two deep-water wells from 2024 to 2029.
“This firm work program is geared towards unlocking the potential both in the existing gas field and nearby prospect areas to provide incremental production,” the DOE said.
It said that with the renewal of the Malampaya SC 38, First Gen Corp. of the Lopez Group and Prime Energy forged an alliance that would allow Prime Energy to lease the FirstGen LNG terminal.
“This will enable a gas aggregation facility that will provide fuel to power the country’s natural gas power plants [beginning with the power plants of First Gen] and enable them to continue running efficiently and reliably, provide blended gas prices more favorable to consumers, make the country as more serious player in the highly competitive LNG global market, and bridge ongoing efforts to locate, develop and harness more indigenous natural gas resources,” the agency said.