Marcos renews Malampaya contract

CEBU - President Ferdinand Marcos Jr. has signed the Service Contract (SC) 38 renewal agreement with members of the consortium - Shell Philippines Exploration BV (45%), Chevron Malampaya LLC (45%), and Philippine National Oil Company-Exploration Corporation (PNOC-EC) (10%) - for the Malampaya Deep Water Gas-to-Power Project, adding, his administration is committed to ensuring energy security in the country.

“As we renew Service Contract (SC) 38, 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,” he said. 

Marcos said his administration is committed to actively pursue the exploration, development, and utilization of the country’s indigenous energy resources.

The Malampaya project, according to Marcos, will reduce the country’s dependence on oil imports and ensure a more stable supply of cleaner energy from an indigenous source.

He also called on the Department of Energy (DOE) to oversee the implementation of the project and to strictly monitor and make sure the consortium’s goals are aligned with the country’s national interests.

Marcos said the government will continue to generate revenues from the project through a favorable sharing scheme. At the same time, the President expressed gratitude to the administration’s partners in the private sector for keeping faith in the government’s resolve.

“Through our strategic partnerships, we will remain on course towards the attainment of our goals of total electrification of our country, and of energy adequacy, reliability, and affordability, all for the betterment of the lives of the ordinary Filipinos,” he said.

Just recently, Marcos said the Malampaya natural gas fields, just 50 kilometers offshore Northwest Palawan, belongs to the Philippines and not China. He said this after Beijing has claimed particular areas where the Malampaya fields are located and even the United Nations Convention on the Law of the Sea (UNCLOS) recognized it as part of the exclusive economic zone of the Philippines.

China’s so-called “nine-dash line,” a set of line segments on various maps that accompanied its claims in the South China Sea or West Philippine Sea, includes the Malampaya natural gas fields.

“The nine dash line covers just about the entire West Philippine Sea. We, on the other hand, have established our baselines which have been recognized and accredited by UNCLOS and therefore there is that conflict and so what happens now especially when it comes to exploration in — for energy — for our energy needs are which law will apply because we say this is part of Philippine territory and therefore Philippine law should apply,” Marcos said.

He said the only way to resolve the issues is to come to a consensus. “It is not an easy process but the Malampaya fields, natural gas fields that lie in our, within our baselines and within our exclusive economic zone and that again is being questioned in certain cases, in certain areas by China and we continue to negotiate with them. We continue to find a way — the essential problem, the essential roadblock to that whole process has been very simple,” Marcos said.

However, the President pointed out that both parties are “slowly inching towards a resolution” regarding their claims on the Malampaya fields.

“It may have to come down to a compromise that will just limit that application, the application of laws maybe to the vessels that are involved in this exploration and exploitation of whatever natural gas fields we can access,” Marcos said, noting that it is just one of the suggestions both parties are looking into to resolve the issue.

“There is no silver bullet where you say, we’ll do this and it’s done. As I said, we are inching slowly towards the resolution and that’s why we must be constant, we must be transparent and we must be accountable for all that we do. And I cannot see any other way to handle the problem other than that,” he said.

The project

The Malampaya Deep Water Gas-to-Power began its commercial operations in January 2002 and has contributed over $12 billion in revenues to the Philippine government while powering up to 20% of Luzon’s electricity requirement. It is one of the largest and most significant industrial endeavors in Philippine history and a joint undertaking of the national government and the private sector.

The project is spearheaded by the Department of Energy, and developed and operated by Shell Philippines Exploration B.V. on behalf of joint venture partners Udenna Corporation and the Philippine National Oil Company-Exploration Corporation.

Since it began operations, the Malampaya project has produced cleaner-burning natural gas which supplies four power plants in Luzon, the country’s largest island, with a combined capacity of 3,200 megawatts. Malampaya is benefiting the country in countless ways, including reducing oil imports, ensuring a more stable supply of cleaner energy from an indigenous resource and meeting up to 20% of the country’s energy requirements.

In 2013, the company embarked on Malampaya Phases 2 and 3, which aimed to maintain the level of gas production to fulfill commitments under existing gas sales agreements, thus ensuring the steady supply of natural gas to power the Luzon electricity grid.

Two additional production wells were successfully installed in 2013 to signify the completion of Malampaya Phase 2. In 2015, Malampaya Phase 3, which involved the design, fabrication and installation of a new Depletion Compression Platform was completed. This is the first offshore platform to be fully built in the Philippines, thus enhancing local employment opportunities and bringing technical expertise into the country. (Cebu Examiner)