By
Lenie Lectura - September 4, 2019
SHELL Philippines
Exploration BV (SPEX), operator of the Malampaya deep water gas-to-power
project, said Tuesday there are discussions with the Department of Energy (DOE)
on its formal request to extend Service Contract (SC) 38.
SPEX managing counsel
Kiril Caral said the letter request was filed in “late 2018” and there has been
no formal reply from the DOE since.
“There was a letter
that was sent… in late 2018 informing the DOE that we expressed our interest in
having SC 38 extended. SC 38 allows us for extension. That’s one of the options
available within SC 38,” said Caral during the Powertrends 2019 press
conference.
SPEX is part of the
Malampaya consortium awarded a license to conduct exploration activities under
SC 38, which is set to expire in 2024.
Caral said SC 38 could be extended for a maximum of 15 years but it is up
to the DOE to grant its request.
A request for
extension was submitted and it’s something for the government to decide.
It’s a matter
ultimately for the DOE to discuss and inform the Malampaya consortium on what
it intends to do on the extension.
Caral said they will
await feedback from the DOE on “what they would want us to do for the extension
to be granted. They have not given a specific time frame but of course, we are
aware that the contract would expire in 2024. It has to be earlier than that.”
This is the first time
that SPEX has admitted that it asked DOE to extend its license. Caral said
there is no need to file for another request, saying there were previous
discussions with the DOE. “It’s ongoing. It’s under discussion, so no decision
yet.”
SPEX had said the
Malampaya gas reserves could last between 2027 and 2029, depending on the
demand. It is also possible that there could be new gas discovery within SC 38.
“Yes, there’s still gas after 2024 but the question is, of course, how much and
that will depend on what happens in the next few years. In SC 38, there have
been discoveries that are not yet being produced. Those are the logical areas
where you might drill the wells,” he said.
The Malampaya project
is developed and operated by SPEX with a 45-percent stake on behalf of
joint-venture partners Chevron Malampaya Llc., also with a 45-percent stake,
and PNOC-EC (Philippine National Oil Co.-Exploration Corp.), which holds the
remaining 10 percent.
40 percent of Luzon needs
The gas facility
supplies 40 percent of Luzon’s power requirements and 30 percent nationwide.
The gas facility
fuels the following gas plants: the 1,000-megawatt Santa Rita, the 500-MW San
Lorenzo, the 1,200-MW Ilijan, 97-MW Avion and the 414-MW San Gabriel.
Caral said the
government has received a “significant contribution” of $11 billion as of
August this year from the Malampaya facility since commercial operations started
in 2001.
Last
month, Sen. Sherwin Gatchalian, Senate Energy committee chief, said SPEX
wants to extend its contract to 2030 so it can explore other potential areas
near SC 38 in hopes these could yield more natural gas and extend the life of
the Malampaya gas facility until 2030.
“We heard that
Shell is willing to explore more around that area. In fact, there are three or
four potential areas around SC 38 and that will eventually extend the same
quantity. That is only a briefing to us by Shell but we also want to understand
how that will affect the LNG [liquefied natural gas] terminal, knowing there
are now new prospects. Because if I am the LNG terminal, why would I import if
there is still [gas] by 2030. My $2-billion [investment] will be sleeping,”
Gatchalian had said.
New advocates’ group
Meanwhile, a group of
energy advocates formed the Philippine Energy Independence Council (PEIC) in
order to move the government and the private sector to explore new indigenous,
renewable, and cleaner energy options for the country.
The PEIC aims to
initiate and sustain specific conversations on indigenous energy, renewable
energy, energy security, energy independence, and other pertinent concepts with
the youth, with rural communities, and with local and national government
officials.
PEIC is the first
formal association in the country committed mainly to achieving the
Philippines’s energy independence. “Our council aims to be at the forefront of
initiatives to continuously initiate public discourses in order to move
government and private-sector decision-makers to beef up our energy reserves,”
noted PEIC Chairman Dr. Tony La Viña. “We hope that these discussions can lead
to concrete steps toward the goal of energy independence.”
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