Malampaya gas field prod’n declines steeply in 2021
By Myrna M. Velasco – July 9, 2022, 11:49 AM
from Manila Bulletin
The depletion of the Malampaya gas field is becoming extremely visible, as its reported production for three quarters in 2021 significantly dipped to 79.054 billion cubic feet (bcf) almost half only of its 141.732 bcf level in 2020.
Data from the Department of Energy (DOE) showed that 76.040 bcf of last year’s Malampaya output had been supplied to power plant-offtakers (gas purchasers) while the balance of 15 million standard cubic feet had been utilized by industrial buyers.
The DOE report on Malampaya’s gas production also indicated that substantial production decline started in 2020, after peak of extraction of 155.495 bcf in 2019.
The unabated dip in Malampaya’s gas output has been largely felt by its power plant off-takers because they are compelled to either de-rate (reduce) the scale of their electricity generation or import more expensive liquid fuels just to continuously run their power facilities.
As culled from the energy department’s documents, the operator of the Malampaya gas field will need to drill one well this 2022 so it can reinforce production at the gas field and for it to continually honor obligation under its remaining gas supply and purchase agreements, primarily for the gas-fed power plants of First Gen Corporation of the Lopez group.
Nevertheless, the energy department cannot commit any certainty on the targeted well drilling – given ongoing discussions on prospective changeover of equity-ownership for the Malampaya field.
Just last month, Prime Infra Holdings Inc. of billionaire Enrique Razon has announced its interest to partner with Udenna Corporation of Davao businessman Dennis Uy so they can take over the gas field from its current operator Shell Philippines Exploration B.V.
The Razon-Uy tandem had not given exact timeframe on when their shares acquisition from Shell will be concluded. Also, they have not laid down specific plans yet on how to stretch the life of the project beyond the expiration of its Service Contract (SC) 38 in February 2024.
The DOE previously hinted of a 15-year license extension that shall be granted to the new equity shareholders in Malampaya, but there was no disclosure made if that was already firmed up prior to the exit of the Duterte administration or if that responsibility had been tossed to the Energy Secretary under Marcos’ reign.
According to the energy department, one facet of negotiation for the license extension is a proposed review of the renewed Malampaya service contract to be done every three years and there is also that commitment to drill two wells, one of which should have been carried out this year.
The DOE document similarly noted that there would be modification in the royalty sharing deal between the government and the new Malampaya consortium in the contract extension with the heftier 70 percent cornered by the State while the balance of 30 percent would be due to the contractor.
As calculated, the adjustment in the royalty sharing deal will generate higher revenue stream for the State at the scale of $128 million yearly from previously at $110 million on average.
