The Department of Energy said Tuesday the ongoing review on the acquisition of a controlling stake in the Malampaya deep-water gas project by Prime Infrastructure Holdings Inc. is “on track,” adding its early resolution is vital to the country’s energy security.
“Just to assure you that the review by the PNOC-EC on Prime Infra’s acquisition is on track, and the notification to the DOE, having been received, that is also moving in parallel,” Energy Secretary Raphael Lotilla said in an online news briefing.
Asked how crucial the review would be for the country’s energy security, Lotilla said the gas field was a “finite one” and the resolution of legal, technical and financial issues on the sale of Malampaya operator Shell Philippines Exploration’s interest to Prime Infrastructure of businessman Enrique Razon was “important for the energy security of the country.”
The Malampaya project is one of the country’s most important power assets, as it produces natural gas to power plants in Batangas City that account for around 20 percent of the Philippines’ total electricity supply. It began operations in 2001, with the consortium’s license for the project set to expire in 2024.
Operating since 2001, the Malampaya project is the only local producer of indigenous natural gas. It supplies fuel to around 40 percent of gas-fired plants in Luzon, generating around 3,457 megawatts for the Luzon grid.
The Malampaya gas field is operated through Service Contract No. 38 granted to the consortium of SPEX, Chevron Malampaya (now UC38LLC) and PNOC EC.
SPEX sold its 45-percent stake to Malampaya Energy XP Pte Ltd., a company previously owned by Udenna Corp. of businessman Dennis Uy. PNOC-EC did not give its consent to the deal. Later on, MEXP and Prime Exploration Pte. Ltd., a subsidiary of Prime Infra, signed a share purchase agreement.
Prime Infra earlier vowed to accelerate investments in the Malampaya gas field to improve the output of existing wells and, if possible, develop new wells in the area once license extension is secured from the government.
Prime Infra’s investment in the expansion of Malampaya operations will be critical to providing the necessary infrastructure to support the development of natural gas in the area, one of the key points defined in the administration’s energy agenda.
Lotilla said last week the review on the Malampaya deals would be finished and resolved within the year, with PNOC EC likely to give the green light on Prime Infra’s investment deal.
“The schedules are quite tight…Even if we stretch a bit, I don’t think they would have to go beyond this year,” he said.
Lotilla said state-owned PNOC Exploration Corp., with its 10-percent stake in the Malampaya project, “will give consent first.”
“The PNOC Exploration Corp. is considering the matter of giving its consent to the sale of Shell’s interest, and as far as the Department of Energy is concerned, we would have to review the sale and the terms and conditions under which it is going to be made,” he said.
“But I can assure you that we will try to adhere to the timelines that are in the department circular that I issued in 2007 on the renewal and approval of transfers and interest in the service contract. I realize that the deadlines there are tight, but as much as possible, we would like to address these issues within the framework of that department circular,” he said.
Lotilla said DOE would tap technical and financial advisors to help the agency review the technical and financial aspects of the proposed sale.
“So I want to assure you and the public that the Department of Energy will exercise the utmost care and diligence in reviewing this proposal,” Lotilla said.
“The main objective is to ensure that the Philippine government and the Filipino people will be able to take full advantage of this resource and that within the framework of Presidential Decree 87, we look forward not only to the extraction of the existing resource but that we also look to the full development of the other oil and gas resources of the country,” he said.
