Postfacto

Earlier this month, President Ferdinand Marcos Jr. granted Service Contract 38 a 15-year extension. This is a major boost for the country’s energy security.

The original service contract for the 830-square kilometer Malampaya gas field was due to expire February next year. With the contract extension, it will now be viable to invest in new deep wells in adjacent areas. Investors will need the extension period to recover the capital needed to sink new wells.

The remaining reserves tapped by the existing deep wells are expected to be exhausted in a few years. Without new productive wells, we will have to import our entire natural gas requirement. Power plants using natural gas now account for a substantial portion of our energy supply.

The existing wells were built by large energy multinationals Shell and Chevron with the Philippine National Oil Company (PNOC) holding a 10 percent share. The two giant companies decided to sell their shares in the gas venture to Filipino corporations.

Dennis Uy’s Udenna bought 45 percent of the shares for $565 million. Enrique Razon’s Prime Infrastructure Capital Inc. bought the other 45 percent share for $460 million.

Prime eventually bought out Udenna and now controls the project’s operation. The new owners committed to investing in two new wells to be done between 2024 and 2029.

The Malampaya gas field, it must be mentioned, are well within Philippine territory. It is not being claimed by the other countries seeking sovereignty over the scattered reefs in the South China Sea. Sitting just northwest of Palawan, any further investment in this gas field will be secure.

While the advantages of extending the service contract seem obvious, one former energy official opposes the move for reasons that escape most of us.

Eduardo Mañalac, in a recent forum, went into what can only be called a rant against the service contract extension. Mañalac served as president of the PNOC and concurrently as undersecretary of the Department of Energy during the early years of the Arroyo administration. His services were abruptly terminated for reasons unclear to this day.

Mañalac calls Prime Infra a “bogus oil company” that did not meet the technical qualifications necessary to be a service contractor. That stunning claim, however, runs against the facts.

Since acquiring control of the Malampaya operation, Prime Infra has kept the wells functioning. The gas extraction operation retained the very same team of Filipino experts responsible for delivering gas from beneath the sea. That team has been supplemented by the hiring of the best foreign talent to ensure utmost efficiency.

In a word, Malampaya is a fully functioning project. There have been no hitches and no calamitous mistakes committed in running the existing wells. The gas supplies continue to flow.

Unless Mañalac wants the gas field returned to the multinationals, there is little to justify the alarm he (and he alone) is trying to raise. With its humongous investment in the project, it is to Prime Infra’s interest to operate the project with utmost competence.

Prime Infra was not timid in responding to the alarm Mañalac is trying to raise. The company called up Mañalac’s professional history to counter his rant.

While he was PNOC chief, Mañalac tried to sell half of PNOC’s Malampaya stake to a South Korean company. The effort was aborted when Romulo Neri, then socioeconomic planning secretary, opposed the deal. Then president Gloria Macapagal Arroyo apparently sided with Neri.

Asked, in an online forum, why he pushed the sale of half of PNOC’s already small share in the project, Mañalac can only give a lame reply. He claimed he was forced to do that by higher ups in the Department of Energy. He claims he strongly believed the PNOC shares should not be sold.

An honorable public official, if he disagreed with his superiors on a crucial policy option, would have promptly resigned his post. Mañalac did not. Nor did he claim redemption when the deal was aborted.

It turns out, too, that Mañalac had a major role in shaping the tripartite deal with China’s CNOOC and Vietnam’s PetroVietnam called the Joint Marine Seismic Undertaking (JMSU). The deal was forged in 2005.

The JMSU would have involved the Chinese and the Vietnamese firms in conducting scientific studies for the presence of oil or gas deposits on a 142,886-square kilometer area of the South China Sea that was inside the Philippines’ exclusive economic zone. Because of legal challenges, the JMSU could not be undertaken until the deal expired in 2008.

Only months ago, our Supreme Court issued a ruling declaring the JMSU unconstitutional. Asked in a recent forum about why he pursued the JMSU deal while he was with PNOC, Mañalac simply replied, “It was not my idea.”

Nevertheless, he tired to justify the JSMU as an effort at “data-gathering.” It was not meant to allow foreign firms to participate in “exploration.”

The distinction between the two involves some hairsplitting. At any rate, that distinction is now academic. The deal’s effectivity has expired uneventfully and the Supreme Court has ruled it unconstitutional.

As he did on the failed attempt to sell PNOC Malampaya shares to a South Korea company, Mañalac attributes his policy decisions to other people. He mumbled something about ensuring the country’s “energy independence” in a manner that “does not affect any territorial claims of any country.”

Everything Mañalac rails about, including the extension of the Malampaya service contract, is now academic. This man speaks after the fact.