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Marcos signs deal extending Malampaya service contract

FERDINAND R. MARCOS, JR. receives a replica of the Malampaya gas field from Prime Infrastructure Capital, Inc. Chairman Enrique K. Razon, Jr. after the ceremonial signing of the renewal of the Malampaya Service Contract 38 in Malacañang on Monday. — PPA POOL

PRESIDENT Ferdinand R. Marcos, Jr. on Monday signed an agreement renewing the service contract for the Malampaya gas field until 2039, according to the Presidential Communications Office (PCO).

The renewal of Service Contract (SC) 38, which covers the Malampaya gas field in offshore Palawan, would reduce the country’s dependence on oil imports and ensure a stable supply of clean energy, Mr. Marcos was quoted as saying in a PCO statement.

The agreement was signed by Mr. Marcos and representatives of the Malampaya Consortium in Malacañang on Monday.

The SC 38 was originally scheduled to expire on Feb. 22, 2024. Under the new agreement, the contract has been extended by another 15 years or until Feb. 22, 2039.

“We optimistically look forward to the continued production and utilization of the remaining reserves of the Malampaya gas field, as well as further exploration and development of its untapped potential,” Mr. Marcos said.

The Malampaya gas field is considered crucial in the Philippines’ energy sector as it is the country’s only indigenous commercial source of natural gas. However, it is expected to be commercially depleted by 2027.

“Today, less than a year before the expiration of SC 38, we find ourselves at a critical juncture for insuring in continued partnership with the private sector the further development and drilling of the SC 38 area at the soonest possible time — and restoring some certainty in our indigenous gas supply,” Energy Secretary Raphael P.M. Lotilla said during the ceremonial signing in Malacañang.

After careful evaluation, Mr. Lotilla said the Department of Energy (DoE) confirmed the Malampaya Consortium’s capacity to sustain operations and meet obligations under the new agreement.

“The DoE recommended the renewal of the service contract, anchored on the commitment of the Consortium to actively explore and evaluate additional gas resources,” he said.

The Malampaya Consortium is composed of Prime Energy Resources Development B.V., a subsidiary of Prime Infrastructure Capital, Inc. (Prime Infra), which has a 45% stake; UC38 LLC; and PNOC Exploration Corp. (PNOC-EC), which own a 45% and 10% interest, respectively.

Enrique K. Razon, Jr., chairman of Prime Infra, said the agreement is a significant development for the Philippines’ energy security and independence.

“The Malampaya asset will continue what it has started in operating this world-class installation for further exploration and utilization of the country’s remaining gas reserves, as well as open up the other potential near field areas for future production,” Mr. Razon said in a separate statement.

The Malampaya gas field supplies over 20% of the electricity requirements of the Luzon grid. To date, the Malampaya gas field only supplies four power plants with a combined capacity of 2,011 megawatts (MW), after the contract of the 1,200-MW Ilijan power plant ended in June last year.

Under the SC 38, the Malampaya Consortium is mandated to conduct a minimum work program, the DoE said. This work program includes geological and geophysical studies and drilling of at least two deep water wells from 2024 to 2029.

The consortium is also required to conduct exploratory drillings outside the Malampaya production area but still with the Service Contract to retain the exploration areas.

If the consortium fails to comply, the DoE can renounce a portion of the exploration areas.

Last year, Prime Infra said it was looking at additional gas fields within its exploration service contract. — Ashley Erika O. Jose and John Victor D. Ordoñez

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