Add’l Malampaya gas find to stall need to build LNG import facilities

Published April 13, 2019, 10:00 PM By Myrna M. Velasco

https://business.mb.com.ph/2019/04/13/addl-malampaya-gas-find-to-stall-need-to-build-lng-import-facilities/

The government will need to re-assess its decision on the entry of investments for liquefied natural gas (LNG) import facilities with new prospects being tendered by Shell Philippines Exploration B.V. (SPEX) that the Malampaya field can still provide fuel to the existing gas-fired power plants until year 2030.

Senate committee on energy Chairman Sherwin T. Gatchalian said additional gas extraction from the field would be feasible if the government will extend the service contract of the Malampaya consortium.

“It’s a new information that came from Shell. So we have to inquire from the DOE (Department of Energy) what will be their strategy with LNG,” the lawmaker said.

Gatchalian opined that if Malampaya would still have enough gas reserves that will be good for the country until 2030, then the planned LNG import facilities may just end up white elephants – which could be a risky proposition given the mammoth investments of US$1.0 billion to US2.0 billion being crunched for these assets.

In the information provided by Shell to the Senate energy committee, the senator indicated that the company sounded off willingness to drill at least three wells in blocks close to the existing production areas in the Malampaya field – and the gas yield will likely be enough to meet the country’s needs for six more years from the lapse of Service Contract (SC) 38 in 2024.

“Shell is willing to explore more around the area. In fact, there are three potential areas around,” Gatchalian indicated.

Nevertheless, he qualified that such will only be accomplished if the government – through the endorsement of the Department of Energy to the Office of the President, will pave the way for consortium’s service contract extension.

“The only request of Shell is for their service contract to be extended, so they can explore and commercially develop these blocks and for us to extend the life of the producing wells until 2030,” the senator relayed.

From the Senate energy committee’s end, the lawmaker noted that their inclination is to get the drift of the government’s positioning for LNG in the energy mix if there would still be additional gas plucked out from the country’s own petroleum basin.

“We also want to understand how will that affect the LNG terminal knowing there is now new prospects. Because if I would be building LNG terminal, why should I import if I know that there would still be indigenous gas until 2030? My US$2.0 billion investment will just be idled,” he stressed.

The energy department previously stated that it will review Shell’s application for license extension – and it will likely tap an independent consultant to assess the remaining potential of the Malampaya field.