“There is a sense of ownership to achieving national energy independence when you bring in Filipino companies to handle the reins of a critical power infrastructure and this is what Prime Infra aims to do with our participation in Malampaya”
By Melandrew T. Velasco
News that Prime Infra Holdings, Inc. will be acquiring a controlling stake in the Malampaya deep-water gas-to-power project is good news.
We know there is a need to address energy requirements for the economy to grow and develop natural gas reserves to contribute to the stability of energy supply in the country.
The entry of Prime Infra into the natural gas industry aligns with its purpose to create better lives and resilient economies through critical infrastructure coupled by its aspiration to help its customers transition to cleaner energy resources to fuel the economic growth of the Philippines.
Natural gas is dubbed as the fuel of the future. According to the website https://malampaya.com/, natural gas is composed of hydrocarbons found deep underground, or extracted through driven wells.
It is formed beneath the earth’s surface over millions of years by the decomposition of organic matter, in the same way oil and coal are formed.
Natural gas is 85-90 percent methane, with varying amounts of ethane, propane, butane, and other hydrocarbon compounds.
Some condensate and oil will always be associated with the gas. In its natural state, the gas is colorless, odorless, and lighter than air.
The Malampaya deep-water gas project ushered in the natural gas industry here. It supports up to 20 percent of the country’s electricity requirements using indigenous resources of natural gas, the cleanest-burning hydrocarbon, and reduces the need for imported oil.
As a joint undertaking of the government and the private sector, it is under the Department of Energy, developed and operated by Shell Philippines Exploration B.V. (SPEX) on behalf of joint venture partners Udenna Corporation and the Philippine National Oil Company-Exploration Corporation.
Udenna Corporation’s entry into the Malampaya project has been the subject of scrutiny.
In 2001, Malampaya began its commercial operations. It has reduced the country’s dependence on oil imports and ensured a more stable supply of cleaner energy.
Phases 2 and 3 of the Malampaya project commenced in 2013 with two additional production wells installed. By 2015, Malampaya Phase 3 was completed.
By 2024, Malampaya’s service contract is set to expire. Prime Infra’s entry is critical to be able to continue operating the project while applying for an extension so it can invest in its expansion, which will sustain the economic and social benefits that Malampaya is providing for the country.
The transition of the operations of Malampaya is critically urgent. Prime Infra and Udenna, as the new operators taking over from Shell Philippines, will need to immediately plan for the expansion to ensure the continuity of the production as long as the reserves support it.
“Natural gas is a critical transition fuel and the modern, state-of-the-art infrastructure built to harness this valuable transition fuel attracted us to pursue this deal – all aspects of the project ticks off our environmental, social, and governance check list that will allow us to contribute more to the country’s transition from expensive and volatile coal and imported fuel prices to affordable cleaner and domestic energy resources like natural gas,” said Prime Infra Chairman Enrique K. Razon, Jr.
“Also, there is a sense of ownership to achieving national energy independence when you bring in Filipino companies to handle the reins of a critical power infrastructure and this is what Prime Infra aims to do with our participation in Malampaya. We will invest and sustain the development and production of domestic gas as long as the terms of the operating license and the natural resources permit,” Razon added.
Prime Infrastructure Holdings, Inc. is Filipino businessman Enrique K. Razon Jr.’s infrastructure arm established and designed specifically to focus on building infrastructure assets that support the most urgent sustainability priorities — clean and renewable energy, access to clean water, waste management, and viable critical infrastructure.
In 2020, Prime Metroline Holdings, Inc. led by Razon signed with Manila Water a subscription agreement for the acquisition of shares of Manila Water bringing in additional investments into Manila Water to pursue more projects and improve its water and wastewater services.
Udenna Corporation is optimistic about the Razon Group’s entry into the Malampaya project.
“We look forward to this opportunity to partner with Prime Infrastructure and PNOC EC, as we explore more ways to fulfill our common vision to make Malampaya sustain its capability to meet the urgent energy security needs of the Philippines,” said Udenna Corporation Chairman and CEO Dennis Uy.
By becoming a strategic investor in Malampaya, Razon has once more become a white knight.
(MTV is a book author with at least 50 titles to his credit.)