DOE assures seamless Malampaya field operation

By Myrna M. Velasco – February 6, 2022, 8:00 PM
from Manila Bulletin

Amid the intensifying political and legal scuffle relating to shares divestment in the asset, the Department of Energy (DOE) has assured that the Malampaya gas field will be on “seamless operation” in the remaining duration of the Duterte administration and up to the lapse of its service contract in the next two years.

In a statement to the media, Energy Secretary Alfonso G. Cusi noted that the gas field “continues to operate seamlessly and optimally despite the sale of the shares.”

The energy chief was referring to the 45-percent Malampaya shares unloading of American energy giant Chevron Corporation to the subsidiary-company of Udenna Corporation that is owned by businessman Dennis Uy. Their deal was consummated in March 2020.

Relative to the approval given by the DOE on the transaction, the Senate Committee on Energy alleged that some irregularities had been committed in the process, hence, filing of cases against Cusi and other energy officials had been recommended before the Office of the Ombudsman.

In view of that development, Cusi stated “I assure everyone that I am ready to face any and all charges brought against me in the proper forum. I am prepared to explain and prove that all of the actions of the Department of Energy regarding the sale and transfer of shares of Malampaya are legal, aboveboard and in accordance with the powers and mandate of the department.”

On further call put forward by Senate Committee on Energy Chairman Sherwin T. Gatchalian for him to resign from his DOE post, Cusi retorted “I remain committed to discharging my duties as Secretary of Energy to the best of my abilities.”

The fate of the Malampaya field is the “billion-dollar question mark” involving the country’s energy security, especially on major concerns like the expiration of its Service Contract (SC) 38 in 2024; the required decision on the drilling of at least one well this year to reinforce reservoir pressure for optimized gas output; and the pending application of current operator Shell Philippines Exploration B.V. for license extension so the production life cycle of the field can still be stretched for several years.

Under the joint operating agreement (JOA) of the Malampaya venture, consortium-members had committed “to drill at least one well by 2022” – and this is an undertaking urgently needing attention because the field has to honor its gas supply commitments to off-taker (gas buyer) power plants.

However, with the anticipated exit of the field’s current operator and the stalled sale of its 45-percent shareholdings to Udenna, the government will have to decide on how to proceed with the targeted well drilling.

In the past two years, gas production from the Malampaya field was already seen treading on precipitous slide – and the strained fuel flow from the asset has been impacting on the generating capacity of the gas plants, hence, resulting in higher electric bills for consumers.

For this year, no less than the energy department had given word that the “gas restriction dilemma” of Malampaya will worsen. Hence, it will also significantly de-rate the electricity generation of the gas plants, which could be a forbidding scenario until the entry of imported liquefied natural gas will be concretized by second to fourth quarter of this year.