Malampaya consortium seeks license extension

MANILA, Philippines - The Malampaya consortium, which has started  a $1-billion expansion program through two new project phases, said it is looking at investing more in the deep water gas-to-power project said it.

The Department of Energy (DOE) will prioritize the review for the extension of Service Contract (SC) 38 that will likely be decided upon next year, a company official said.

“We are requesting the government for a license extension. That is in the works,” Shell Philippines Exploration B.V. (SPEx) managing director and Malampaya asset manager Sebastian Quiniones told reporters.

“We have already advised them that we are willing to continue on and we can invest again if necessary,” Quiniones added.

The consortium pursuing the Malampaya project in Northwest Palawan, led by operator SPEx, wants a 15-year extension of its SC to 2039 as its licence will expire in 2024.

“We are thinking of doing more exploration and the likes but again, we will need the government’s go ahead before we can start investing again,” Quiniones said.

The Malampaya consortium conducted yesterday a strike steel ceremony at the Keppel Shipyard in Subic, Zambales to mark the start of Malampaya Phase 3.

In June, executives of Royal Dutch Shell Plc. and Pilipinas Shell Petroleum Corp. committed to President Aquino a $1-billion investment for Malampaya Phase 2 and 3.

Phase 2 will involve the installation of two new subsea gas wells by 2014 while Phase 3 is composed of new compressors and a platform that will be completed in 2015.

Quiniones said the two new phases will increase the rate of gas recovery from the wells.

The Malampaya project fuels three natural gas power plants with a combined capacity of 2,700 megawatts, equivalent to about 36 percent of Luzon’s power generation requirements.

Quiniones said the consortium is asking for an extension of the SC given the possibility of more oil and gas in the 83,000-hectare project.

“The extension will have to follow the regulatory review and the standards by which the DOE reviews the contract,” DOE Undersecretary Josefina Patricia Asirit said.

“It is something that will be prioritized,” Asirit said, adding that the decision on the extension will likely be ready next year.

Since starting commercial operations in 2001, the Malampaya project has so far paid more than $1-billion royalties to the government.

The Malampaya consortium is composed of SPEx, Chevron Malampaya LLC each with a 45-percent stake, and state-led Philippine National Oil Co.-Exploration Corp. holding the remaining 10 percent.

To date, there are 27 SCs in the Philippines but only the Malampaya and Galoc oil fields are in regular production.

The DOE is pursuing energy independence and sustainability through the development of indigenous energy resources like coal, petroleum and natural gas.

“We do not drill enough in the Philippines. We are high in prospectability but drilling is infrequent,” Quiniones pointed out.