THE Malampaya consortium led by gas field operator Prime Energy Resources Development B.V. of tycoon Enrique Razon has programmed initial investments of about US $600 million for the drilling of up to three exploration wells by 2026 and a tieback production facility to allow production of additional gas from the field in northwest Palawan.
“In total, for two wells and the tieback for production, this would amount to about 600 million USD,” Department of Energy Undersecretary Alessandro Sales said, in a media briefing.
“In terms of committed investment, in the renewal contract itself, the work commitment for the first phase is at least two new wells. In their submissions to us, they are indicating that they are preparing to drill for three wells and this is above the committed program for renewal contract,” Sales said.
He said the service contract 38 consortium wants to drill three wells as it would be more cost-effective.
“In terms of the cost of drilling one well, currently the cost increased and they are looking at between 80 million to 90 million USD per well,” Sales added.
According to him, if the two of the wells are found to be producing wells “and if these wells are successful and we move into connecting them back to production in the Malampaya facilities, we would require an additional 330 to 360 million USD for the tie- back and subsea facilities to allow these near field wells to produce.”
Sales said the Malampaya field’s best estimate for the near field is about additional 210 billion cubic feet of gas.
Aside from Prime Energy Resources Development B.V. (Prime Energy), a subsidiary of Prime Infrastructure Capital Inc., other members of the SC 38 consortium are UC38 LLC and PNOC Exploration Corporation.
Energy Secretary Raphael Lotilla said this is the first extension ever granted to a natural gas producing Service Contract in the Philippines.
“We hope that it would not be the last of its kind. That there are attractive prospects within the same Service Contract area worthy of an extension beyond the initial period shows promise in exploration activities in the Philippines,” Lotilla said.
He said the Malampaya consortium is the first consortium backed up entirely by Filipinos and run entirely by Filipinos.
“A remarkable milestone in the maturation of the Philippine petroleum industry,” the energy chief said.
Lotilla said Prime Energy, as operator, and its personnel have shown their technical competence over the last six months by managing the decline of the gas supply & undertaking successfully a maintenance activity.
“This confirms the findings of the DOE last year on the operator’s technical, financial & legal qualifications,” he said.
President Ferdinand R. Marcos, Jr. approved on Monday the renewal of SC 38 or the Malampaya Deep Water Gas to Power Project for 15 years, until February 22, 2039.
“This is a significant development for our national 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,” said Enrique K. Razon Jr., Chairman of Prime Infrastructure Capital, Inc. (Prime Infra).
The Malampaya Project presently supplies natural gas to power four (4) power generation plants in Batangas (Santa Rita, San Lorenzo, San Gabriel, and Avion) with a combined capacity of 2,011 megawatts. The major components of the Malampaya Project include subsea wells and flowlines, a shallow water platform to process natural gas, a depletion compression platform, a catenary anchored leg mooring buoy (CALM buoy) for the export of liquid condensate, a 504-kilometer long gas export pipeline on the seabed, and an onshore gas plant in Batangas City.
Under SC 38, the consortium has been remitting 60% of the net proceeds from Petroleum Operations to the Government. During the period from October 2001 to December 2022, the consortium has remitted more than US$ 13.14 Billion.
Catherine R. Cueto
