State-run PNOC Exploration Corp. projected a high success rate for new wells to be drilled by the Malampaya consortium, a top executive said.
The company owns a 10-percent interest in Service Contract 38, which covers the Malampaya gas field in northwest Palawan.
PNOC EC president Franz Josef George Alvarez said during the budget hearing of the Senate sub-finance committee Friday the consortium led by operator Prime Energy Resources Development B.V. would drill two new wells in 2025.
The government renewed for another 15 years SC 38 and required the consortium to explore and drill at least two new deep water wells in the first phase of its work program for 2024 to 2029.
The work program is designed to unlock the potential of both the Malampaya gas field and nearby areas. Alvarez said preparations for actual drilling were ongoing.
“By 2025, we will drill two additional wells. If successful, by 2026 we will have additional production,” Alvarez said.
“The probability of success is around 80 percent,” Alvarez said when asked by Senator Sherwin Gatchalian.
The Malampaya consortium is composed of Prime Energy, a subsidiary of Prime Infrastructure Capital Inc. led by businessman Enrique Razon Jr., UC38 LLC and PNOC EC.
Prime Energy has a 45-percent stake in the consortium, while UC 38 LLC owns the remaining 45 percent.
Alvarez said the consortium was expected to invest at least $690 million in further exploring the remaining gas deposits in Malampaya.
Prime Energy and its personnel have shown technical competence in managing the decline in gas supply and completing an accident-free maintenance program of Malampaya.
PNOC EC, as part of the consortium, will spend some P3.45 billion on the work program.
Alvarez said total cost of the program was estimated to be $690 million spread in three years—2023 to 2026. PNOC-EC’s share in the expenses, according to Alvarez, would be 10 percent.
PNOC-EC proposed a budget of P11.94 billion for 2024, including P2.02 billion for the Malampaya operations.
The Malampaya project is one of the country’s most important power assets, feeding natural gas to power plants in Batangas City that account for 20 percent of Luzon’s total energy requirement.
Government officials said the renewal of SC 38 is a key development for the country’s national energy security and independence.
The current best estimate for the near field is an additional 210 billion cubic feet of gas.
The consortium remitted to the national government more than $13.14 billion from October 2001 to December 2022 as net proceeds from Malampaya.