Prime Energy Resources Development B.V. (Prime Energy) controlled by businessman Enrique Razon Jr. budgeted $187 million for 2024 capital expenditures mainly for well preparations under Phase 4 of the Malampaya deep water gas-to-power project, a company executive said Thursday.
Prime Energy managing director Donnabel Kuizon Cruz said the company is ramping up preparations to drill at least two deepwater wells—the Camago and Malampaya East prospects by 2025.
Cruz said that before that, the planned expenditure in 2024 of about $187 million would include procurement of drilling equipment, subsea equipment and umbilicals and pipeline and securing the drilling rig.
Cruz said if the drilling is successful and proves that gas reserves can be produced commercially, the necessary pipelines will be installed and tied into the Malampaya production facilities.
The planned drilling and development or Malampaya Phase 4 requires total investment of more than $600 million. Prime Energy expects the new wells to produce gas by 2026.
The company also expressed optimism there would be no intervention or disruption from China when Malampaya Phase 4 drilling and development activities take place in 2025 and 2026.
Prime Energy said China had never claimed the Malampaya or Service Contract 38 area in northwest Palawan.
It said exploration activities for SC 38 (and its precursor GSEC 47) started in 1988, development activities in 1998 and production activities in 2001. It said that from 1988 to date, China had not intervened in any Malampaya petroleum operations.
Prime Energy, a subsidiary of Prime Infrastructure Capital Inc., owns a 45-percent operating interest in SC 38 or the Malampaya project, supplying 20 percent of Luzon’s electricity requirements.
Prime Energy and its partners secured the renewal of SC 38 for an additional 15 years or up to 2039. The ceremonial signing by President Ferdinand Marcos Jr. and Energy Secretary Raphael Lotilla was held on May 15, 2023 in Malacanang.
The renewal of SC 38 paves the way for new investment to explore and develop additional gas reserves as gas production from Malampaya has been declining after 22 years of operation.
Meanwhile, Prime Energy and its partners sought the support of the Department of Energy to ensure that there is a market for the new gas volumes to underpin the significant investment required.
The company also asked DOE to help streamline and simplify the permits and requirements imposed by various government agencies which could hamper the completion of Malampaya Phase 4 on time and within budget.
Prime Energy said the DOE’s support would help ensure the speedy and successful implementation of Malampaya Phase 4.
The Malampaya project supported the Philippines’ energy security, generated significant revenues of more than $13.14 billion for the government in its more than 20 years of operation and made significant contributions to stakeholder communities through sustainable social and environmental programs.