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Friday, March 29, 2024

PXP offers to take over Malampaya

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Listed oil and gas company PXP Energy Corp. controlled by the camp of businessman Manuel Pangilinan submitted an unsolicited proposal to the Energy Department to take over the operations of the $4.5-billion Malampaya gas project once the contract of the consortium running it expires by 2024.

PXP Energy said in a disclosure to the stock exchange it submitted an unsolicited proposal on the strategic development and utilization of an integrated gas hub in Malampaya in northwest Palawan upon the expiry of service contract No. 38 in 2024.

The Malampaya platform provides natural gas to the country’s five natural gas facilities with a combined capacity of more than 3,000 megawatts.

“Under the unsolicited proposal, the Malampaya infrastructure and distribution network, which is strategically positioned in the West Philippine Sea, is envisioned to support the continued development of the Malampaya resources, as well as the economic development of Sampaguita field and other nearby prospects under SC 72, which is operated by PXP through Forum Ltd.,” the company said.

SC 72,  which covers 8,800 square kilometers west off Palawan (Recto Bank), is estimated to contain bigger reserves than the Malampaya gas project.  SC 72 was put under force majeure since December 15, 2014 because of the territorial dispute between the Philippines and China. 

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PXP Energy said its unsolicited proposal aimed to ensure energy security from indigenous natural gas resources for the next 25 years and beyond, while bringing in significant revenues to the Philippine government.

“The use of the Malampaya facilities as the integrated gas hub will also support the development of a robust indigenous gas industry. These project benefits are consistent with DOE’s commitment to pursue national development through the two-fold agenda of attaining energy independence and implementing power market reforms as contained in the Philippine Energy Plan, and is aligned with the DOE’s clean fuel strategy, including the reduction of dependence on coal,” it said.

PXP Energy said its unsolicited proposal would yield substantial foreign exchange savings resulting from the reduced importation of coal and other fuel supply.

“In the meantime, PXP has expressed an interest to acquire the 45-percent ownership of Chevron Malampaya LLC in SC 38 through the right to match of the other SC 38 consortium members,” it said.

Energy Secretary Alfonso Cusi said he had not yet seen the PXP proposal.  Cusi said earlier the government was not inclined to grant Shell Philippines Exploration B.V., the current operator of the project, an extension of its service contract on the same terms as the existing SC 38.

Cusi ordered a study on the way forward for the Malampaya gas project including the level of gas availability. The Malampaya gas field is expected to be depleted starting 2022, although gas could last until 2027 to 2030.

Spex, the operator and member of the SC 38 consortium owning a 45-percent stake, submitted a letter request for the extension of the contract to the Energy Department last year. Other members of the SC 38 consortium are Chevron Malampaya with 45-percent stake and state-owned PNOC Exploration Corp. with 10 percent.

Located 50 kilometers offshore northwest Palawan, the Malampaya project began its commercial operations in 2001 and has contributed over $10 billion in revenues to the Philippine government.

PXP is an upstream oil and gas company incorporated in the Philippines whose shares are listed on the Philippine Stock Exchange. The company, directly and indirectly, owns oil and gas exploration and production assets in the Philippines and indirectly owns an exploration asset in Peru.

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