GAS DEV’T PROGRESS DOE: Malampaya SC 38 extension opens door to more gas, energy projects

July 24, 2023 People's Tonight 122 views

THE Department of Energy (DOE) cited the renewal of the Malampaya service contract as one of the major accomplishments of the current administration that focuses on indigenous energy sources for reliable, stable and affordable electricity supply.

The DOE, in a report, said the extension of Malampaya’s Service Contract 38 until February 22, 2039 was a key indicator of progress in the development of the natural gas industry in the Philippines.

Extending SC 38 allows full production of the Malampaya field through full utilization of its remaining gas reserves of about 147 billion cubic feet.

The DOE added that this would jump-start the exploration and development of other fields in the area believed to hold up to 210 billion cubic feet more of natural gas.

In his 2022 State of the Nation Address, President Ferdinand “Bongbong” Marcos Jr noted the “uncertain policy in upstream gas, particularly in the area close to Malampaya.”

Marcos said this required “clarification of the processes and review of service contract policy.”

The government took the lead in providing investment incentives by approving the sale of Shell Philippines Exploration B.V.’s 45-percent stake in SC 38.

The DOE report said the approval of the Shell shares’ sale to MEXP on September 30, 2022 “resulted in an all-Filipino consortium now operating the Malampaya

Deepwater Gas to Power Project, the largest upstream petroleum operations in the country.”

In July 2022, Razon led-Prime Exploration formalized its purchase of MEXP, which had acquired the Shell shares.

Prime Infra, through its subsidiary Prime Energy Resources Development B.V., holds a 45 percent operating stake in the Malampaya gas-to-power project.

The extended SC 38 required the Malampaya consortium to explore the area around Malampaya for new wells.

The contract extension also required the consortium to put in place a minimum work program for geological and geophysical studies and to drill at least two deep-water wells from 2024 to 2029.

“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.

The DOE also said that with the renewal of the Malampaya SC 38, First Gen and Prime Energy has 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 agency said, in its report.

Other accomplishments cited by the DOE included various renewable energy (RE) policies to achieve a 35-percent RE share in power generation mix by 2030 and 50 percent by 2040.

It is in line with the Philippines’ international commitment to transition to indigenous and clean energy sources away from highly pollutive fossil fuels.