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Friday, March 29, 2024

New rules to close Malampaya

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The $4.5-billion Malampaya gas-to-power project may be forced to shut down if the government pursues the implementation of the Environment Department’s new effluent standards, an industry executive said Tuesday.

Shell Philippines Exploration B.V. managing director Sebastian Quinones told reporters at the sidelines at a Senate hearing the Malampaya operator was waiting for the Energy Department’s reaction on Department Administrative Order 2016-08 or Water Guidelines and General Effluent Standards.

The new DAO prescribes water quality guidelines for each type of water body. It also imposes effluent quality parameters for each industry.

“If we cannot comply, we will shut down operations. If it [DENR order] becomes executory, we have been told that these new effluent standards must be complied with.  There’s no available technology yet that can allow us to satisfy the rules, so Malampaya will shutdown,” Quinones said.

Spex operates the Malampaya gas project in northwest Palawan which fuel three natural gas power plants with a combined capacity of 2,700 megawatts.

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Other members of the Malampaya consortium are Chevron Malampaya LLC and PNOC Exploration Corp.

The move followed the income tax claim issue between the Malampaya consortium and the Commission of Audit, which reached P151 billion as of end-June.

“Government needs to decide in terms of policy, where we’re going—to import scenario or continue with exploration and production of locally indigenous fuels. That’s a key policy decision the government must take,” Quinones said.

“If go import, new laws must be crafted to allow LNG [liquified natural gas] industry in the country. It would require new laws to assist existing plants that are currently being [supplied] by the Malampaya,” he said.

Quinones said if the government decided to develop its own resources, “we would request the government’s assistance on the challenges we’re facing now.”

He said these issues included the DENR effluent standards, the CoA tax regime in the country and the  legality of the service contracts.

Energy Department director Rino Abad said during the hearing that Environment’s Industry Specific Effluent Standards or ISES study “was not properly conducted and the suggestion of the industry was not considered.”

He said the Energy Department sent a letter to the Environment Department for reconsideration of the inclusion of the upstream petroleum industry until a proper and complete study was done.

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