Cusi wants SPEX to file new application

For Malampaya license extension

By Myrna M. Velasco – May 5, 2019, 10:00 PM
from Manila Bulletin

Energy Secretary Alfonso G. Cusi is requiring the Malampaya consortium to file a new application with the Department of Energy (DOE) on the latter’s bid for license extension if it wants to continually operate the country’s commercial gas field.

Cusi said he cannot grant approval if there is no new application directly filed with his office. It has to be noted that the previous application lodged by Malampaya field operator Shell Philippine Exploration B.V. (SPEX) was with then Energy Secretary Jose Rene Almendras of the Aquino administration.

The other members of the Malampaya consortium are American firm Chevron Malampaya LLC and state-run Philippine National Oil Co.- Exploration Corp.
“They (members of the Malampaya consortium) should give it to me in writing. If they need something, they should ask questions the proper way, like how I asked them questions in a straightforward way,” the energy chief said.

He added: “They know the procedure – we have to study that. I cannot just sign anything without them filing an application because that will put me in jail.”

Cusi was exasperated that the consortium discussed its plea for license extension with the media and the Senate committee on energy, without filing a new and direct application yet with the DOE.

The Malampaya consortium has been seeking government’s imprimatur for it to drill new wells and possibly extend the production life cycle of the Malampaya field until 2030 – that will be six years from the lapse of the original Service Contract 38 in 2024.

The field operator has been sounding off that with successful drilling, the Malampaya project may still yield additional gas that could power the existing gas plants of the country – at more than 3,000-megawatt capacity.

The original license extension application of the SC 38 consortium had been for 15 years or until year 2039. But that was not acted upon by the previous administration.

If the eventual decision is for the government to allow SC 38’s license extension, that has to be recommended by the DOE for the President’s approval and signature, based on the jurisprudence set out by a Supreme Court ruling.

The government has been exploring three options as to future plans for the Malampaya field: one is government takeover; two is license extension but for the State to increase its stake in the consortium; and three, to tap a third party for the operation and maintenance (O&M) contract on the gas field.

When asked if the government still has the appetite to align itself as the operator of the gas field, Cusi remarked, “Why would I want to takeover Malampaya? Is it beneficial to the Filipinos, is it good for the country? I have to look at all the options.”

The Malampaya consortium just recently won its arbitration case at the International Chamber of Commerce (ICC) in Singapore – that was in reference to the differing tax treatment interpretation raised against it by the Commission on Audit.