Malampaya gas price to remain lower than imported LNG

Malampaya natural gas plant. Source: https://malampaya.com/

MANILA, Philippines—Discussion is ongoing between the Department of Energy (DOE) and the Malampaya consortium to keep prices of indigenous gas stable under new gas sale and purchase agreements (GSPAs) in the 15-year extension of service contract 38.

“The pricing formula is not being proposed to be changed,” Energy Secretary Raphael Lotilla said.

“That is one pricing formula that has remained stable and actually provides a cushion for the people over the 20-year period that the formula has been in place,” Lotilla added.

According to him, the price of Malampaya gas is lower than imported liquefied natural gas (LNG) which he described as a “gift” to the Filipino people.

“That’s why we are encouraging the natural gas exploration, so this can continue to cushion the power prices for the country,a” Lotilla said.

Energy Undersecretary Alessandro Sales is leading discussion with Malampaya consortium and market leaders, according to Lotilla.

He said the talks aim to draw up GSPAs to last the duration of the 15-year Malampaya service contract extension.

The first 25-year stretch of the Malampaya contract will expire February this year along with GSPAs for the gas output.

This would need new GSPAs to cover the remaining gas in the field and future deposits that could be extracted from new wells near the existing one.

Lotilla said the plans of Prime Energy and the other shareholders in Malampaya for new round of seismic survey and the drilling of at least two wells are “on track”.

“As far as the drilling program for Malampaya, it is on stream,” he said.

The signing of new GSPAs, he added, will incentivize new investments that consortium members will pour on the project.

Lotilla said he hoped gas from new wells would start flowing by 2026. “Of course there are things that need to be worked on,” he said.