Gov’t take from Malampaya hits P200.4B

The government has received P200.41 billion (about $4.64 billion) from the Malampaya gas-to-power project off Palawan since the complex began producing natural gas commercially in 2002, according to the Department of Energy.

The amount represented the total amount of royalties that the Philippine government received as of May this year.

Documents from the DoE showed that the gross proceeds from the Malampaya, including project contractor’s cut in the pie and cost recovery allotments, rounded up to an aggregate of $11 billion as of end-2010.

The fraction for contractor Shell Philippines Exploration B.V. and partners had been placed at $2.85 billion (or P122.8 billion), while the cost recovery allocations or the amount allocated to recover capital investments in the project totaled $3.8 billion, the DoE reported.

Under the service contract agreement, 70 percent of the gross proceeds from the sale of natural gas would go to the contractor to cover the investment cost. The remaining 30 percent will be shared between the government and the consortium on a 60-40 basis, respectively.

Once the contractor recovers its investments, the 30-percent share would then increase, allowing the government to gain from these petroleum projects. This is why the Philippine government’s share was much bigger now as the consortium operating the Malampaya power project already recovered its initial investments back in 2006.

The $4.5-billion Malampaya power project provides natural gas to the 1,200-megawatt Ilijan plant of Korea Electric Power Corp. (Kepco), the 1,000-MW Sta. Rita facility and 500-MW San Lorenzo plant, all in Batangas.

Royal Dutch Shell, through Shell Philippines Exploration BV, owns a 45-percent stake in Service Contract 38, which covers Malampaya. Chevron Malampaya LLC owns the other 45-percent stake while local PNOC Exploration Corp. holds the remaining 10 percent.

Earlier this year, Royal Dutch Shell CFO Simon P. Henry announced that they planned to invest more than $1 billion to develop the second phase of the Malampaya project to extend the life of the wells.

The Department of Energy, however, has yet to approve the application of SPEX for a 15-year extension of its SC 38 license up to 2039 from 2024, the year when the license would have expired under the original agreement.

In 2010, SPEX managing director Sebastian C. Quiniones Jr. said the extension would allow the consortium to proceed with its planned developments within the service contract area.