Marcos signs Malampaya renewal agreement, extends contract up to 2039

President Ferdinand “Bongbong” Marcos Jr. has signed the Renewal Agreement for the Malampaya Service Contract No. 38 (SC 38), allowing the continued production of the Malampaya gas field until Feb. 22, 2039.

In his speech during the event, the President said the renewal was significant to the country’s energy security as Malampaya powers 20 percent of Luzon’s energy needs.

According to the Department of Energy (DOE), the signing ensured that the remaining gas reserves would be further explored and utilized.

In a statement, the DOE said the SC 38 Consortium must conduct a minimum work program consisting of geological and geophysical studies and the drilling of at least two deep water wells during Sub-Phase 1 from 2024 to 2029.

“This firm work program is geared towards unlocking the potential both in the existing gas field and nearby prospect areas to provide incremental production,” it said.

Aside from continuing the production operations, the SC 38 Consortium is required to conduct exploratory drilling further away from the Malampaya production area within the Service Contract to retain the exploration areas. Failure to comply would force the SC 38 Consortium to relinquish a portion of the exploration areas.

According to the DOE, the discovery of additional reserves in the Malampaya gas field will boost the country’s quest for energy security.

“It is also expected to encourage opportunities for further exploration in the country, which to date remains underexplored, and to add to the Philippines’ energy portfolio,” it said.

In consonance with international oil and gas exploration practice, the SC 38 Consortium is required to submit a Decommissioning Plan and Budget covering the abandonment of wells and decommissioning of facilities following applicable international standards, including timing and costs, within 30 calendar days from the effectivity of the Renewal Agreement.

The Malampaya project, a public-private partnership offshore Palawan, supplies five power plants in Luzon: Sta. Rita (1,000 MW), San Lorenzo (500 MW), Ilijan (1,200 MW), San Gabriel (414 MW), and Avion (97 MW).

Based on the Philippine National Oil Company (PNOC) Exploration Corporation website, the total government share from the project’s revenues was $11.9 billion as of December 2020.

In addition to the government’s 60-percent share in the net revenues, the project also reduces oil imports, ensuring a more stable supply of cleaner energy from an indigenous resource and meeting up to 20 percent of the country’s energy requirements. — Argyll Cyrus Geducos