MANILA, Philippines - Shell Philippines Exploration B.V. (SPEX), the upstream company leading the consortium that operates the Malampaya deep water gas-to-power project in offshore Palawan, has remitted $900 million in royalties to the National Government in 2014, a top official said.
In an interview, SPEX managing director Sebastian Quiniones said last year’s turnover amounted to $900 million, bringing the total royalties remitted to the government since the project started in 2001 to $8.5 billion.
He said last year’s payment was lower than the previous years’ remittances because of the decline in the prices of oil and gas, which had an impact on pricing.
In 2012 for instance, the Malampaya project proponents turned over $1.1 billion to the National Government.
The amount represents the government’s 2012 revenue from the pioneering natural gas project that supplies 2,700 megawatts or up to 45 percent of Luzon’s power requirements.
The royalties of Malampaya has so far been used for energy projects such as the fuel requirements of the National Power Corp.’s Small Power Utilities Group (SPUG), the Pantawid Pasada Program as well as the purchase of the USS marine vessel for the security perimeter of the Malampaya project.
Malampaya, which began operating in 2001, is a joint undertaking of the Philippine government and the private sector. The project is spearheaded by the Department of Energy and developed and operated by SPEX with a 45 percent stake on behalf of joint venture partners Chevron Malampaya LLC, also with a 45 percent stake, and PNOC Exploration Corp., which holds the remaining 10 percent.
Under the service contract agreement, 70 percent of the gross proceeds from the sale of natural gas would go to the contractor to recover the investment cost. The remaining 30 percent is shared by the government and the consortium on a 60-40 basis, respectively.
Upon its discovery, Malampaya had about 2.7 trillion cubic feet of natural gas reserves and 85 million barrels of condensate, located some 3,000 meters below sea level.
The indigenous gas from the field fuels three natural gas-fired power stations with a total generating capacity of 2,700 megawatts, accounting for roughly 45 percent of Luzon’s power generation requirements. These power plants are the 1,000 MW Sta. Rita and 500-MW San Lorenzo plants owned by the Lopez Group and the 1,200 MW Ilijan plant owned by Kepco Philippines.