The Management Association of the Philippines expressed concerns that the $650-million banked or unutilized gas from the Malampaya field can no longer be pumped out because of technical constraints.
MAP, one of the country’s active business organizations, said in a position paper state-owned Philippine National Oil Co. had listed the banked gas in its books. PNOC wanted to use the banked gas to finance its entry into the country’s planned first integrated liquefied natural gas facility.
“There is currently no commercial arrangement for its withdrawal from the reservoir. There are only 6 more years till the SC-38 contract expires and there is no technical solution to withdraw the bank gas within this time frame,” MAP said.
It said PNOC must discuss immediately with the service contract 38 consortium and the Energy Department its options and come up with an agreement on a way forward.
The consortium is composed of Shell Philippines Exploration B.V., as operator, Chevron Malampaya LLC and PNOC subsidiary PNOC Exploration Corp. The consortium’s contract with the government will end by 2024.
“Otherwise, the gas will be stranded,” MAP said.
MAP expressed support to a Senate resolution inquiring on the government’s natural gas industry policy in light of the expiration of the Malampaya franchise. Senator Sherwin Gatchalian introduced the resolution at the Senate.
MAP said there was no clarity on how the Philippines would manage the decline of the Malampaya gas reservoir, new exploration and production and the liquified natural gas facility to support the existing power plants within the next five years.
MAP said certain steps must be done to ensure the development of the natural gas industry, aside from addressing the banked gas issue.
It said government must recommend to the Commission on Audit to drop its taxation view against the Malampaya consortium that prompted Spex to file an arbitration case against the government.
“By dropping the claim, the arbitration cases filed against the government will have no basis and, thus, will be moot. It will clearly show to investors that the Philippines honors its contracts,” MAP said.
The business group said the government should also settle the 1,200-megawatt Ilijan natural gas power plant ownership issue.
Power Sector Assets and Liabilities Management Corp. wants to revoke the independent power producer agreement of San Miguel Corp. in the Ilijan power plant due to alleged unsettled claims.
