Consortium open to more investments in Malampaya

SUBIC BAY, Zambales—The consortium operating the Malampaya deepwater-to-gas power project off Palawan is keen on pouring more investments to develop the gas field even as it completes an additional $1-billion capital outlay to sustain gas production.

Sebastian Quiniones, managing director of consortium member Shell Philippines Exploration BV, told reporters here that any further investment was contingent with the 15-year extension of the Service Contract 38 license. Energy Undersecretary Josefina Patricia M. Asirit said the extension could be awarded next year.

“We are requesting the government for a license extension—that’s in the works. We are hoping that the government will allow us to continue. There’s still gas there even after the license period has expired,” Quiniones said on the sidelines of the Malampaya Phase 3 strike steel ceremony here at the Keppel Subic Shipyard.

“The Malampaya consortium is very, very willing to continue [operating the field]. We can invest again if necessary. We are also thinking of doing more exploration and the like, but again, we will need the government’s go-ahead before investing again,” he added.

The license extension, according to Quiniones, would allow the Malampaya consortium—composed of SPEx, Chevron Malampaya and PNOC Exploration Corp.—to do anything more than what it could do, assuming there was still gas within the SC 38 reservoir. Should the Department of Energy decide to grant an extension, the SC 38 license will be valid up to 2039.

Meanwhile, officials from Malampaya and the local government graced the ceremonial strike steel ceremony, which formally signaled the start of the $750-million Malampaya Phase III.

“Today’s gathering is another tangible sign of what private-public partnerships can lead to—a joint venture undertaken by Shell Philippines Exploration, Chevron Malampaya and PNOC EC and the Philippine government. This platform will allow us to more efficiently harness the power of nature for the benefit of the people,” said President Aquino in his speech, which was read by Asirit.

“At present, we import an estimated 336,300 barrels of crude oil per calendar day for our energy consumption. But with the full operation of the Malampaya project, our reliance on oil imports to meet our growing energy demands will decrease. Our nation’s energy security is consequently ensured,” Mr. Aquino said.

The fabrication of the platform was awarded to Keppel Subic Shipyard last July 2. The third phase is expected to be completed by 2015.

For Phase 2, the SC 38 consortium is investing $250 million for the drilling and development of two additional wells. This is expected to be completed by February 2014.

Malampaya to date is one of the biggest and most significant industrial endeavors in Philippine history. Since it began producing natural gas in October 2001, the Malampaya gas field has been providing benefits that included the supply of clean electricity to the Luzon grid.

By implementing phases 2 and 3, the SC 38 consortium will be able to ensure the continued supply of natural gas to three crucial power facilities in Luzon—1,200-megawatt Ilijan plant of Korea Electric Power Corp. (Kepco); 1,000-MW Sta. Rita and 500-MW San Lorenzo plants, all in Batangas. The electricity generated from these three facilities alone accounts for 40 to 45 percent of the power generated in Luzon With a report from Robert Gonzaga, Inquirer Central Luzon