President Ferdinand Marcos Jr. ushered in a new phase of national development by extending Service Contract No. 38 (SC 38) in May 2023, a move that ensures the continued operation of the Malampaya Deep Water Gas-to-Power Project in northwest Palawan, according to the Department of Energy.
“The renewal of SC 38, a critical decision made under the President’s administration, allows the SC 38 Consortium to extend the operational life of the Malampaya facility, which would have otherwise been forced to cease production as early as 2024,” Energy Secretary Sharon Garin said.
Garin said that without this decisive intervention, the Philippines would have faced a greater risk of dependence on imported fuel sources, threatening the stability, affordability, and sustainability of the power supply for millions of Filipino consumers.
The Malampaya contract extension also opens the door for continued exploration and development within the service contract area, including new drilling activities that could unlock additional gas reserves.
The Malampaya Phase 4 (MP4) drilling campaign is underway, with the first gas production from the new wells targeted by 2026, just three years after the contract’s extension. This is a notable achievement, considering that similar offshore projects typically require a five-year development timeline.
Malampaya has played a vital role in the country’s energy landscape, having supplied up to 40 percent of Luzon’s electricity needs at its peak. Revenues from the project, in the form of government royalties and taxes, have provided valuable fiscal support for national development programs and infrastructure.
“This administration is committed to protecting the Filipino people from the volatility of global energy markets,” Garin said.
“We are not only sustaining a vital source of indigenous energy but also reinforcing our goal of achieving a stable, secure, and affordable energy future,” she said.
Garin joined the President on Monday in an aerial visit over the Malampaya drilling rig, which is now actively boring into the seabed. The results of this effort, potentially new reserves, will be known by the end of the year.
