Malampaya license extension targeted by year-end – DOE

By Myrna M. Velasco – August 21, 2019, 10:00 PM
from Manila Bulletin

The Department of Energy (DOE) is firming up the submission of “final recommendations” on the targeted license extension of the multi-billion Malampaya deep water gas field project by the end of the year.

Energy Secretary Alfonso G. Cusi (Source: https://www.bloomberg.com)

Energy Secretary Alfonso G. Cusi (Source: https://www.bloomberg.com)

DOE Assistant Secretary Leonido J. Pulido III disclosed that Energy Secretary Alfonso G. Cusi has instructed the department’s Energy Resource Development Bureau (ERDB) “to come up with recommendation before the end of the year.”

The context of studies being carried out, he said, leans on “whether or not it’s commercially viable for another operator to come in,” albeit he qualified that “it might not be.”

The other instruction given by Cusi to the ERDB is for the team “to determine whether the data submitted is verifiable and if it’s correct.”

To recall, Shell Philippines Exploration B.V., which is the lead operator in the Malampaya consortium, previously indicated that the gas field can still produce gas until 2029-2030 at a scale that could meet the fuel requirements of the existing 3,200 megawatts of gas-fed power facilities in the country.

When asked if a government takeover is still in the cards, Pulido said “I don’t think that’s on the table,” although he noted that “possibilities are still open,” including that proposition.

From the recommendations that the ERDB will be submitting to the Secretary, the department will solidify a decision on the license extension bid of the Malampaya consortium – and if ever, what will be the most feasible track to undertake for such.

The next step for DOE will be to forward its own recommendation to the Office of the President – as it is only the President of the country that can sign service contracts for petroleum exploration investments.

“The Secretary would have to decide. But at the end of the day, it will be the Office of the President that will make that final decision,” Pulido said.

The Malampaya consortium’s application for license extension has been strung up since the past administration, but with the field’s Service Contract 38 expiring in 2024, a serious decision has to be rendered by the current government leadership if it still wants the country’s only commercial gas field to continually contribute to its energy needs.

To extract additional gas from the field, the operator will need time leeway to do additional drilling and pursue developments so gas will ceaselessly flow from Malampaya beyond 2024.

And that timeline is almost exhausted now – especially with forecasts that production decline at the gas field may start by 2022 or just more than two years from this time.

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