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Thursday, April 25, 2024

Consortium eyeing new Malampaya gas output; $13B in royalties remitted to NG

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THE Malampaya consortium has turned over $13 billion to the national government (NG), representing the total royalties remitted since the Malampaya deep water gas-to-power project in offshore Palawan started.

“The SC [service contract] 38 has generated and remitted to the Philippine government some $13 billion since its inception,” said Prime Infrastructure Capital Inc. (Prime Infra) President and CEO Guillaume Lucci at the Powertrends International Business Forum held on Wednesday.

The Malampaya gas field is operated through SC 38 granted to the consortium of Prime Energy Resources Development B.V. (Prime Energy)—a subsidiary of Razon-led Prime Infra—UC38LLC and state firm Philippine National Oil Company-Exploration Corp. (PNOC-EC).

Lucci said the consortium, which is seeking a license extension so it could still ensure gas supply from the depleting Malampaya gas field, assured during the forum, “We’re here to stay, we’re here to invest, we’re here to increase dramatically the gas production with the extended term of the service contract and resource availability, and more importantly, we are trying to make sure we produce the least cost to consumers.”

The Malampaya project is one of the country’s most important power assets, as it produces natural gas for power plants that account for around 20 percent of the Philippines’s total electricity requirements. It began operations in 2001, with the consortium’s license for the project set to expire in 2024.

The extension of the service contract is also meant to improve the output of existing wells and develop nearby gas fields. “Our drop-dead day to produce new gas or new well is first quarter of 2026 and we hope we can actually accelerate that as much as possible while doing it safely and reliably,” Lucci said.

Department of Energy (DOE) Director for Energy Policy and Planning Bureau Michael Sinocruz, who was also present during the forum, said the review of the license extension is ongoing. “We are reviewing it for final approval,” he said.

Energy Secretary Raphael Lotilla earlier acknowledged that the ongoing review is crucial to the country’s energy security as the “present Malampaya-Camago field is a finite one.”

The Malampaya asset is a significant addition to Prime Infra’s growing energy portfolio as it reduces the country’s reliance on imported fuel and helps drive economic productivity and industrial growth.

Prime Infra’s investment in the expansion of Malampaya operations will also be critical in providing the necessary infrastructure that would support the development of natural gas in the area, one of the key points defined in the administration’s energy agenda.

“The objective really is to produce gas, and ensure we have the least cost of gas in the country. We have a deep obligation to ensure that,” added Lucci.

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