Malampaya natural gas plant. (Source: http://malampaya.com/)
The Department of Energy (DOE) cited the renewal of the Malampaya service contract as one of the main achievements of the current administration that focuses on indigenous energy sources for a reliable, stable and affordable electricity supply.
The DOE, in a report, said that the extension of Malampaya Service Contract 38 until February 22, 2039 was a key indicator of progress in the development of the natural gas industry in the Philippines.
The SC 38 extension enables full production from the Malampaya field through full utilization of its remaining gas reserves of approximately 147 billion cubic feet.
The DOE added that this would prompt exploration and development of other fields in the area believed to contain up to 210 billion more cubic feet of natural gas.
In his 2022 State of the Union Address, President Ferdinand “Bongbong” Marcos Jr noted the “uncertain policy on upstream gas, particularly in the area near Malampaya.”
Marcos said this required “clarification of the processes and revision of the service contract policy.”
The government took the lead in providing investment incentives by approving the sale of Shell Philippines Exploration BV’s 45 percent stake in SC 38.
The DOE report said the approval of the sale of Shell’s shares to MEXP on September 30, 2022 “resulted in an all-Filipino consortium now operating the Malampaya Deepwater Gas-Fired Power Project, the largest upstream oil operations in the country.”
In July 2022, Razon, led by Prime Exploration, formalized the purchase of MEXP, which had acquired Shell’s shares.
Prime Infra, through its subsidiary Prime Energy Resources Development BV, has a 45 percent operating interest 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 implement a minimum work program for geological and geophysical studies and drill at least two deepwater wells between 2024 and 2029.
“This firm work program is geared toward unlocking potential in both the existing gas field and nearby prospective areas to provide incremental production,” the DOE said.
Other achievements cited by the DOE included various renewable energy (RE) policies to achieve a 35 percent RE share of the power generation mix by 2030 and 50 percent by 2040.
It is in line with the Philippines’ international commitment to transition to clean, indigenous energy sources away from highly polluting fossil fuels.
The DOE also said that with the renovation of SC 38, First Gen and Prime Energy have forged an alliance to allow Prime Energy to lease and operate the FirstGen LNG Terminal.
The gas aggregation framework will provide a reliable supply of fuel to natural gas planners, including first-generation ones, and “allow them to continue to operate efficiently and reliably” at “more favorable costs for consumers,” the DOE said in the report.
Other achievements cited by the DOE included various renewable energy (RE) policies to achieve a 35 percent RE share of the power generation mix by 2030 and 50 percent by 2040.
It is in line with the Philippines’ international commitment to transition to clean, indigenous energy sources away from highly polluting fossil fuels.
TSB
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