Published
August 16, 2019, 10:00 PM By Myrna M. Velasco
The
Department of Energy (DOE) has advance notice that the multi-billion Malampaya
deep water gas-to-power project will continue operating beyond the 2024
contract lapse with its original consortium-operator led by Shell Philippines
Exploration B.V.
Energy
Secretary Alfonso G. Cusi said that was the assurance he had given to the
Malampaya consortium employees and executives during his recent visit to the
gas production platform in Palawan.
“They
asked me what will happen after 2024? I told them you will continue to work
because we will continue running that (Malampaya gas field),” he said.
The
energy chief emphasized the only question that his department is resolving now
is “who will be operating the field by then?”
He
acknowledged the license extension application of the SPEX-led consortium; and
indicated that it is now under the evaluation process of the relevant units of
the energy department.
“An extension does not immediately say: okay.
It’s going to be evaluated,” Cusi stressed, adding that the application is now
being assessed by the team of Energy Undersecretary Donato D. Marcos; who was
also with Cusi during the platform visit.
When
it comes to recommendation on the propounded Malampaya license extension, Cusi
told reporters “there’s nothing yet on my table, there’s a process, so we have
to wait for that.”
The
Malampaya consortium has repeatedly sounded off that the country’s only
commercial gas field could still have an output that will be enough to run the
existing 3,200 megawatts of power capacity until 2029 to 2030 – entailing then
that it could still have additional 5-6 years life cycle on that scale of
production.
However,
extraction beyond the Service Contract 38 duration cannot be concretized
without the government extending the gas field’s operating license. The
prevailing Malampaya contract will expire in 2024.
Marcos
had apprised media that they have been exploring at least three options for the
Malampaya license extension: One is for the government to hike its stake in the
project to a level that will be equal to that of SPEX and Chevron Malampaya LLC
(preferably 33.33% equity for each including Philippine National Oil
Company-Exploration Corporation); two, the government will takeover the gas
field and will just tap a third party technical contractor to operate it; and
three; to extend the license of the SC 38 consortium with some adjustments in
the terms.
The
Malampaya field is not just fueling a significant fraction of the country’s
energy requirements, but it is a well-entrenched dollar-earner (primarily on
its export of condensate) and it is also injecting massive stream of revenues
into the State coffers.
By
the end of this month, it is anticipated that the magnitude of revenues already
contributed by the Malampaya gas field project to the Philippine government
will be reaching colossal US$11.0 billion.
The
royalty sharing arrangement for upstream petroleum projects in the Philippines
– including the Malampaya field, is at 60:40 ratio in favor of the government –
as sanctioned by the provisions of Presidential Decree 87, the law that
underpins oil and gas exploration and developments in the country.
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