Malampaya extension to provide addt’l 210 billion cubic ft. natural gas —DOE

The renewal of the Service Contract 38, or the Malampaya gas field agreement, is seen to provide more indigenous natural gas supply for the Philippines to enable reliable, stable, and affordable electricity supply, according to the Department of Energy (DOE).

In its report, the DOE cited the extension of SC 38, which was originally set to expire in February 2024, until February 22, 2039 as among the agency’s accomplishments during the first year of the Marcos administration.

In February this year, President Ferdinand Marcos Jr. signed the renewal agreement for the SC 38, allowing the continued production of the gas field for another 15 years.

The DOE said the license extension “allows full production of the Malampaya gas field by ensuring the utilization of the remaining gas reserves of about 147 billion cubic feet.”

“Further, this will kickstart the timely exploration and development of in-field and near-field prospects which may provide additional reserves of around 210 billion cubic feet,” the Energy Department said.

The Malampaya Consortium committed to investing about $600 million (roughly P33.7 billion) for further exploration and drilling activities beyond the existing production area within SC 38.

The consortium was mandated to explore and drill at least two new deep water wells during the first phase (2024-2029) of the work program under the 15-year renewed production contract.

“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 in its report.

In his first State of the Nation Address last year, Marcos the government will “provide investment incentives,” as he cited the need to clarify “uncertain policy in upstream gas, particularly in the area close to Malampaya.”

The President added that this required “clarification of the processes and review of service contract policy.”

The DOE said the government took the lead in providing investment incentives by approving the sale of Shell Philippines Exploration BV’s 45% stake in the Malampaya Consortium.

In October 2022, the DOE gave the go signal for Razon-led Prime Infrastructure Capital Inc. to acquire the 45% interest of Shell Philippines Exploration BV (SPEX) in the SC 38. 

Aside from Prime, other members of the SC 38 Consortium are Dennis Uy-led UC38 LLC and the state-run Philippine National Oil Company-Exploration Corp. (PNOC-EC).

In its report, the Energy Department said that with the renewal of the SC 38, First Gen and Prime Energy have forged an alliance that will allow Prime Energy to lease and operate 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 DOE said.

Early this month, energy supply firm First Gen Corp. confirmed that there are ongoing discussions with Prime Infrastructure Capital Inc. for the development of a gas aggregation  —VAL, GMA Integrated News