A SENIOR legislator said Tuesday that the government must put up the Malampaya gas field for auction, if authorities decide to appoint a new operator once the project’s contract expires in 2024.
The offshore field is covered by Service Contract (SC) 38, in which the Philippine National Oil Co. Exploration Corp. holds a 10% interest.
“If ever (the) government decides to get another operator, it has to bid it out because that’s the only way for us to get the best price, (and) best operator possible and for us to get the best option. So, my view here is that, after 2024, if government do(es) decide to look for a (new) operator… or (keep the) existing operator, they have to bid it out,” Senator Sherwin T. Gatchalian said during a Management Association of Philippines webinar on Tuesday.
He was responding to a question on the possibility of extending the contract.
Mr. Gatchalian, who chairs his chamber’s energy committee, said that once the contract expires in three years’ time, the project will “revert” to the government, and the public will, in turn, be entitled to the earnings from the gas field.
“On the other side of that, government will be operating the gas field, so this is a decision that gov’t needs to make and analyze because government itself has a lot of constraints in terms of operations,” he said.
Shell Petroleum N.V. has announced that it is selling 100% of its stake in Malampaya gas field operator Shell Philippines Exploration B.V. ( SPEx) to Udenna Corp. subsidiary Malampaya Energy XP Pte Ltd. for $380 million, with additional payments of up to $80 million depending on asset performance and commodity prices between 2022 to 2024.
The Department of Energy (DoE) has described the Shell-Udenna deal as a private transaction but added that it has the power to clear the deal.
SPEx holds a 45% interest in SC 38. If the deal is completed, Udenna Corp. will hold 90% of interest in SC 38, since its other unit UC38 LLC already holds 45% in the service contract.
On Tuesday, Mr. Gatchalian also noted that there are potential oil and gas deposits in the West Philippine Sea (WPS) which can cover the country’s energy demands.
Citing DoE data, he said that some 6,048 million barrels of oil, which can be acquired in the contested area, is equivalent to Philippine demand for 36 years. Meanwhile, a total of 7,108 billion cubic feet of gas can be obtained from the WPS, good for 96 years of demand.
The called for a program to “aggressively explore” for resources, noting the lack of activity on the oil and gas front. — Angelica Y. Yang