The Department of Energy said it denied the unsolicited proposal of listed oil and gas firm PXP Energy Corp. controlled by the camp of businessman Manuel Pangilinan to take over the operations of the $4.5-billion Malampaya gas project by 2024.
“We advised PXP that we cannot take cognizance of their unsolicited proposal. The reason is very basic,” Energy assistant secretary Leonido Pulido III said in a briefing.
PXP Energy earlier submitted an unsolicited proposal for 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.
“We have what we call the PCECP [Philippine Conventional Energy Contracting Program] and under that legal framework, there are only two ways in order to get the service contracts for oil exploration in the Philippines―one is through pre-determined areas and two is under nomination on open areas,” Pulido said.
“However, what they did is they submitted an unsolicited proposal over an area with an existing service contract, so we had to deny the unsolicited proposal of PXP,” he said.
The Malampaya gas project provides natural gas to five natural gas facilities in Batangas province with a combined capacity of more than 3,000 megawatts.
SC 38 is controlled by the Malampaya consortium led by Shell Philippines Exploration B.V. as the operator with a 45-percent stake, Chevron Malampaya LLC also with 45 percent and state-run PNOC Exploration Corp. with 10 percent.
Chevron Malampaya sold its stake to Udenna Group of businessman Dennis Uy. but the transaction has yet to be completed.
Under PXP Energy’s 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 and the economic development of Sampaguita Field and other nearby prospects under SC 72, which is operated by PXP through Forum (GSEC 101) Ltd.
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 has been put under force majeure since Dec. 15, 2014 over the territorial dispute with China.
Energy Secretary Alfonso Cusi ordered a study on the way forward for the Malampaya gas project including the level of gas availability.
The Malampaya gas field is projected to start to be depleted by 2022 but the gas is estimated to last until 2027 to 2030.
PXP Energy said its unsolicited proposal aimed to ensure energy security to the country 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.
Located 50 kilometers offshore Northwest Palawan, the Malampaya project began commercial operations in 2001 and contributed over $10 billion in revenues to the Philippine government.