Marcos renews Malampaya Service Contract 38 for another 15 years

President Ferdinand “Bongbong” Marcos Jr. signed Monday the renewal agreement for the Malampaya Service Contract 38 (SC 38), allowing the continued production of the gas field for another 15 years.

“This is the key to our drive to energy security and calculated to advance the nation’s energy interest. This project will reduce our dependence on oil imports while ensuring a stable supply of energy,” Marcos said during the signing ceremony in Malacañang Palace.

“It is consistent with the Constitution and our state policy of hastening discovery and production of indigenous petrol. As we renew the contract, we look forward to the continued production and utilization of the remaining reserves of the Malampaya gas field as well as further exploration and development of untapped depot,” he added.

He said the renewed SC 38 will generate more revenues for the government, given that the  Malampaya gas project has generated a total of P374 billion of revenues since the project started in 1990.

“Because of the contract renewal, the government will continue to generate revenues from the project through a favorable sharing scheme with our private sector partner,” Marcos said.

“We are confident in the capability of the SC 38 consortium in handling this project,” he added.

In a statement, the Department of Energy (DOE) said the 25-year  production contract — set to expire on February 22, 2024 — was renewed until February 22, 2029.

“This will allow for the continued production of the Malampaya gas field, ensuring that the remaining gas reserves are further explored and utilized,” the DOE said.

The Malampaya gas-to-power facility fuels three gas-fired power plants with a total generating capacity of 2,700 megawatts (MW)—providing up to 30% of the power generation needs of Luzon.

It is operated through SC 38, granted to the consortium of Prime Energy Resources Development B.V., Dennis Uy-led UC38LLC, and state-run Philippine National Oil Company-Exploration Corp. (PNOC-EC)

Under SC 38, the Malampaya Consortium is required to conduct geological and geophysical studies and the drilling of at least two deep water wells covered by Sub-Phase 1 from 2024 to 2029.

It also required the conduct of exploratory drilling away from the Malampaya production area within the service contract for the consortium to retain the exploration areas, else relinquish a portion.

“The discovery of additional reserves in the Malampaya gas field will boost the country’s quest for energy security. It is also expected to encourage opportunities for further exploration in the country, which to date remains underexplored, and to add to the Philippines’ energy portfolio,” the DOE said.

The DOE last October gave the go signal for Razon-led Prime Infrastructure Capital Inc. to acquire the 45% interest of Shell Philippines Exploration BV (SPEX) in the Malampaya Service Contract 38.

“While major regular maintenance works have been carried out over the last two decades, this is the first time under an all-Filipino owned consortium,” the DOE said.

Prime Infra completed the acqusition of the 45% stake last November, and renamed the SPEX to Prime Energy Resources Development B.V.

Prime Infra in July announced that its unit Prime Exploration Pte. Ltd. inked a share purchase agreement to acquire Malampaya Energy from Davao-based businessman Dennis Uy’s Udenna Corp..

Uy’s Malampaya Energy inked a share purchase deal with Shell Petroleum N.V. to acquire SPEX in May 2021, but this did not push through after the Philippine National Oil Company Exploration (PNOC-EC) withdrew its consent.

Prior to Uy’s acquisition of Chevron’s participating stake and the Razon Group’s buyout of SPEX, Malampaya Consortium was composed of SPEX, Chevron, and the PNOC-EC — which still holds 10% interest in the gas field.

Prime Infra also earlier committed to expand gas production and look into developing nearby gas fields.—AOL, GMA Integrated News