At the outset, it must be emphasized that the uninterrupted operations and supply of natural gas from the Malampaya Deep Water Gas-to-Power Project remains to be one of the top priorities of the Department of Energy (DOE) to ensure energy security for the country, especially as the global economy reels from the energy crisis brought about by the conflict between Russia and Ukraine.
The keen interest of investors in Service Contract 38, notably from the Razon group, bolsters the position long asserted by the Department, that the Malampaya Service Contract remains to be economically viable, and presents an attractive investment opportunity for the upstream oil and gas industry.
The potential entry of Prime Infrastructure, owned by Mr. Enrique K. Razon, Jr., as partner of the Udenna Corporation – which is in the process of purchasing Shell Philippines Exploration B.V. (SPEX), is a positive development not only for the Malampaya consortium, but also the power sector as a whole. Their involvement could further improve the financial standing and technical experience of the consortium, and more importantly, facilitate the progress of much needed and urgent development of Malampaya, given the depleting reserves in the existing wells.
Should the negotiations push through, the DOE looks forward to SPEX continuing as the operator of Malampaya and rapidly progressing with the urgent drilling activities required to further develop Malampaya and arrest the depletion. Without which, at current depletion rates, Malampaya will only be able to provide gas sufficient for 1000MW of power by 2024 versus 3000MW in 2021.