Energy security sealed

“Malampaya reduced oil imports by more than 800,000 barrels per year, which saved the country an estimated $2.5 billion in annual import costs.

Two new wells have been lined up for drilling at the Malampaya natural gas field which brings hope that the resource will continue to provide indigenous electricity.

Last 15 May, President Ferdinand “Bongbong” Marcos Jr. renewed Service Contract 38, which covers the Malampaya development, for another 15 years.

Various political considerations had confounded the extension of the current contract that is scheduled to expire next year.

Business interests were banking on the contract lapsing and the government conducting a new auction that would have freed the new operator from having to deal with the consortium that includes oil giants Shell and Chevron that each holds a 45-percent stake.

The state-owned Philippine National Oil Co.-Exploration Corp. owns 10 percent.

Despite projections that the current wells would be depleted by 2027, Malampaya continues to generate interest since that area in the West Philippine Sea is known to be rich in fuel deposits.

Holding up exploration in the area is the contrasting viewpoint of claimants.

The proposed Joint Marine Seismic Undertaking among the China National Oil Corp., the Vietnam Oil and Gas Corp., and the Philippine National Oil Co., all state firms, was ruled unconstitutional by the Supreme Court.

Last 5 July, the Supreme Court denied with finality their motion for reconsideration and upheld its decision of last January junking the tripartite agreement.

The High Court’s decision thus placed activities in the contested West Philippine Sea in a virtual stalemate after joint explorations were ruled out.

Thus, attention returned to the areas that had existing contracts for development.

In a briefing with President Ferdinand Marcos Jr., Prime Energy officials led by top honcho Enrique K. Razon presented the Malampaya timetable which includes the first drilling for nearby fields by the end of 2024 and a new or additional gas supply under the same service contract by 2026.

The improved outlook for Natgas came about after the hurdle to the contract renewal that had blocked new investments was overcome.

Without the certainty of an extended government license, investments in the project were frozen.

Energy Secretary Raphael Lotilla expressed confidence that with the unlocking of new capital as a result of the extension of the contract, new wells will be developed.

Digging one well would cost the consortium P500 million.

The Malampaya field’s best estimate for new Natgas fields is an additional 210 billion cubic feet of gas or about 10 percent of the extracted fuel from the field.

Prime Energy also presented an aggregation strategy that would augment natural gas with imported liquefied natural gas or LNG.

President Marcos welcomed the proposal as the key to the country’s energy security.

The proposed blending is expected to reduce electricity prices while ensuring a stable supply since it will be made available by Prime Energy to all gas power plants at a uniform price.

An extended deal will also mean that the government will continue collecting revenues from royalties in the project.

In more than 20 years, the Malampaya Project has generated revenues of over $13.14 billion, or P723 billion for the government.

It also reduced oil imports by more than 800,000 barrels per year, which saved the country an estimated $2.5 billion in annual import costs.

The most significant development in the Malampaya project, however, is it’s being freed from the vicious noises of the opportunists who want to undermine energy security to serve their partisan agenda.

*****
Credit belongs to: tribune.net.ph