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MVP to pursue bid for Malampaya gas field

Service contract extension deemed necessary
/ 05:16 AM March 04, 2021

Businessman Manuel Pangilinan will proceed with his plan to buy into the Malampaya geothermal gas field but sees the extension of its service contract, which will expire in 2024, necessary to bring in new money to develop near field reserves.

Whether or not the First Pacific group is successful in buying the 45-percent stake held by Shell Philippines Exploration B.V. (SPEx) in Malampaya—which fuels the power plants that account for almost 40 percent of Luzon’s power generation capacity—Pangilinan said the group would also pursue service contract (SC) 72, or the Recto Bank oil exploration project.

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“If we are fortunate to get SC72 going, we would need the facilities of Malampaya to process the raw gas that would be produced by SC72, so regardless of whether we own it or not, we will have to pipe the gas to Malampaya for processing and then of course Malampaya’s existing pipeline over to Batangas so that it can be piped to the existing gas plants out there in Batangas,” Pangilinan said at a press briefing on Wednesday.

“Independent of whether we are successful in investing in Malampaya, we will pursue SC72 because SC72 needs Malampaya,” he said.

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Asked about Malampaya’s expiring contract in 2024, Pangilinan said it was not a necessary condition for SC72 to have the contract extended. Once the Malampaya contract expires in 2024, the government will take over the facilities and at some point decide on further commercial development.

“The extension is key if there are plans by the government or private sector or both to proceed with the development of near field reserves of Malampaya. This extension is important so that people, when they put in new money to develop new reserves, there’s got to be an extension of the concession for the redevelopment as well as the extension of the contract to sell,” he said.

The application for contract extension is still pending with the Department of Energy since 2008, when the SC38 (Malampaya) consortium filed for a 15-year extension application. The Malampaya supply is expected to be depleted by 2027.

Pangilinan’s group has submitted a nonbinding offer to acquire Shell’s interest in the consortium.

If and when Shell accepts the offer, Pangilinan said First Pacific would need a new technical partner to run the facility.

“We don’t have any experience in running a gas field. The Senate itself has raised the issue of tech expertise so we have to deal with that issue,” he said.

Asked whether the group had live discussions with China National Offshore Oil Corp., for Malampaya, Pangilinan said there were no such talks.

“It may complicate matters as nothing is definite yet on SC38,” he said.

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