Malampaya group mulls $1-B expansion

MANILA, Philippines - The consortium led by Shell Philippines Exploration B.V. (Spex) operating the $4.5-billion Malampaya deep water gas-to-power project in Palawan is planning to invest an additional $1 billion to extract more gas in the exploration field, an energy official said.

On the sidelines of the joint membership meeting of Makati Business Club yesterday, Energy Undersecretary Jay Layug said the group is eyeing more production from the Malampaya field of as much as the equivalent of 300 megawatts (MW).

The Malampaya project under Service Contract 38 in Northwest Palawan currently fuels three natural gas-fired power plants in Batangas: The Sta. Rita, San Lorenzo and Ilijan facilities with total capacity of 2,700 MW. The gas field is earlier believed to possess a reserve of around 3,000 MW.

According to Layug, the Malampaya consortium–composed of Spex (45 percent), Chevron (45 percent) and PNOC-Exploration Corp. (10 percent) – expects to commence the second phase of the extensive drilling activities in the area within the year.

“The $1 billion is not a one-time investment. You’ll need to make sure that you maintain (the project) and to maintain is not cheap,” Layug said, explaining the huge investment cost. The first phase of the project costs at about $1.5 billion.

“The consortium is looking at additional sale from Malampaya of around 300 MW,” Layug noted.

The second phase is expected to be completed over the next five years. The Malampaya gas field is expected to produce until 2024.

The DOE official said the consortium is now negotiating for gas supply purchase agreements with possible offtakers or buyers of the 300 MW additional gas.

“Our advise to them (consortium) is to do a public bidding or a negotiated sale with full transparency,” he said.

He said the National Government has earned revenues in the form of royalties and tax payments from the project amounting to P100 billion since 2002.

The Malampaya project provides about half of the requirements of the Luzon grid and 30 percent of the entire power needs of the country.