Malampaya consortium seeks 15-year contract extension

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The Malampaya gas field offshore Palawan being operated by The Malampaya gas field offshore Palawan being operated by Shell Philippines Exploration B.V.

The Malampaya gas field offshore Palawan being operated by The Malampaya gas field offshore Palawan being operated by Shell Philippines Exploration B.V.

THE consortium that operates the Malampaya natural gas project off northwest Palawan is seeking a 15-year extension of its contract, which is set to expire in 2024.

Energy Secretary Carlos Jericho Petilla said that the consortium has asked for an extension of its contract due to the likelihood that the gas field still contains enough reserves.

The Malampaya gas field is being operated by Shell Philippines Exploration B.V. in joint venture with Chevron Malampaya LLC and PNOC Exploration Corporation (PNOC EC).

Shell Philippines leads the consortium as operator and owns a 45-percent stake, while Chevron Malampaya also owns 45 percent and PNOC EC holds the remaining 10 percent.


Sebastian Quiñones, Shell general manager, said the consortium has sought the extension of the contract to operate mainly to explore for new natural gas deposits.

Quiñones said they are still looking for a new gas field near the $2 billion Malampaya platform, but the exploration should have the government’s go-signal.

“We would proceed with more exploration. We have to conduct drilling for us to be able to find first gas. Then we would proceed with development,” Quiñones said.

Petilla said the DOE will look into the request of the consortium, adding that the agency is now exploring alternative power sources, including imported liquefied natural gas (LNG).

The energy official said the consortium  had commissioned a study indicating that the gas field will likely last until 2030. According to the study, Malampaya will last an extra five years if it is operated as a baseload  supplier, and can last after 2030 if it is used as mid-merit supplier.

Mid-merit plants supply the gap between baseload and peaking plants, which run during peak hours.

“The life of the Malampaya gas field depends largely on the usage of the power plants,” said Petilla.

The Malampaya gas field under Service Contract 38 fuels three power plants in Batangas with a total capacity of 2,700 megawatts (MW), providing 40 percent to 45 percent of Luzon’s energy needs.

The three Batangas plants are currently running as baseload (or 24 hours a day, seven days a week) except during forced outages and maintenance shutdowns.

To draw more gas from the Malampaya gas field, the consortium has embarked on a $1 billion project to meet its supply commitments to the three power plants.

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