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Wednesday, June 19, 2024

Shell focuses on finding new Malampaya gas field

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Shell Companies in the Philippines is pushing for more oil and gas exploration to find another Malampaya gas field, instead of putting up an import terminal for liquefied natural gas.

“The economic question in LNG, if those who will use it are the existing ones we have, which are around 3 gigawatts of capacity, then actually if we can drill and find one more [gas field], that’s enough to feed the five plants,” SCIP chairman Cesar Romero said.

Romero said LNG terminals would face the risk of being stranded if a new gas discovery was made.

“The risk of LNG terminal is who will be your customer. If sensibilities prevail, indigenous always trumps…over imports. The import terminal, then if there is discovery, hopefully us, the LNG facility may be stranded,” he said.

SCIP includes Shell Philippines Exploration B.V., which is engaged in oil exploration, and Pilipinas Shell Petroleum Corp. which is involved in the downstream retail oil industry. 

“What we are trying to advocate is to give priority to indigenous over import, because the government will earn from it. The consortium has already given P10 billion to government as of August,” Romero said.

Romero said Shell was looking at the existing Service Contract 38 or the Malampaya gas project for new discoveries and “various territories.”

“We are looking at various territories.  Of course, SC 38 will always remain a priority for us because the asset is there.  We are prepared to do near field exploration,” he said.

Romero said SCIP was prepared to invest more in the country, but was still seeking clarity on the issue of incentives for the oil and gas sector.

“We want to invest but we hope we can get clarity to the fiscal regime which is PD [Presidential Decree] 87 be upheld,” he said.

Petroleum Association of the Philippines president Don Paulino, who is also the managing director of Spex, said studies showed that the country’s energy requirements would double in 20 years and to help meet this increasing demand, the government should ramp up tapping energy sources that are indigenous to the Philippines.  

“There have been a lot of studies in the past and one such study says that GDP growth is strongly correlated to energy demand and vice versa,” Paulino said.

“Therefore, we need energy to grow the Philippines,” he said.

Paulino said the real challenge for the Philippines is to provide sustainable energy at the cheapest rate possible. “But in order to do this, we have to develop local indigenous energy sources,” he said.

The country’s electricity requirements are currently mostly met by imported fuel.

Paulino said the Philippines is a rich source of energy and, if properly tapped, can complement the growth of renewables and lessen the country’s reliance on imported oil. 

“The truth is that there is local, cleaner-burning energy in the Philippines and it is already providing 30 to 50 percent of the country’s power needs.  This is natural gas from Malampaya,” Paulino said.

“What we need right now is to encourage more explorations so we can find and develop new indigenous energy sources,” he said.

“An example of this is what we have been doing with Malampaya in the last 17 years,” he said.

The Malampaya Deep Water Gas-to-Power project has been providing around 30 percent of the country’s energy needs. This even peaks to 50 percent during the summer months.

The Malampaya project has been drawing natural gas from beneath the seafloor of the West Philippine Sea and this fuels five power station plants with a total generating capacity of 3,200 megawatts.

Malampaya enables the country to reduce its oil imports, ensure a more stable supply of energy, a cleaner source of power from natural gas and helps various communities develop sustainable social and environmental programs.

The Malampaya consortium is led by SPEx as the project’s operator, with joint venture partners Chevron Malampaya Llc and Philippine National Oil Company Exploration Corp. The consortium has remitted $10 billion in revenues to the Philippine government since the project’s start of operations in 2001.

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