PXP Energy Corp. is planning to appeal the Department of Energy’s (DoE) rejection of its unsolicited proposal to assume the operations of the $4.5-billion Malampaya gas field in offshore Palawan.
“At this time, PXP is considering other options in pursuing the project including the submission of a letter to the DOE for a reconsideration of the unsolicited proposal given the expected benefits of the project to the country,” the Pangilinan-led firm said in a disclosure on Tuesday.
Early this week, DoE Assistant Secretary Leonido Pulido 3rd said the agency declined PXP Energy’s unsolicited bid to develop and utilize an integrated gas hub within the natural gas field upon the expiry of Service Contract (SC) 38 in 2024.
Currently, a consortium of Shell Philippines Exploration BV, Chevron Malampaya LLC, and state-run PNOC Exploration Corp. holds SC 38 covering the Malampaya Deep Water Gas-to-Power Project.
However, Pulido said the DoE declined the offer submitted by the company last month because it was “over an area with an existing service contract.”
“We advised PXP [Energy] that they cannot be cognizant of their proposal,” Pulido said on Monday.
“The reason is very basic: We have [the] Philippine Conventional Energy Contracting Program and under that legal framework, we only have two ways to award service contracts and oil exploration permits. One is through predetermined areas and nomination,”
he told reporters.
On November 25, PXP Energy received the agency’s response to its offer, which stated that Malampaya’s infrastructure and distribution network, strategically positioned in the West Philippine Sea, was envisioned to support the continued development of the Malampaya resources, as well as the economic development of Sampaguita Field and other nearby prospects under SC 72.
The listed firm, through Forum Energy Ltd., has a 70-percent participating interest in SC 72.
Exploration of the area has been stalled in 2014, when then-president Benigno Aquino 3rd imposed a moratorium on all exploration and drilling works in disputed areas amid escalating tensions with China over the strategic sea.
“The project intends to ensure energy security to the country from indigenous natural gas resources for the next 25 years and beyond, while bringing in significant revenues to the Philippine government. The use of the Malampaya facilities as the integrated gas hub will also support the development of a robust indigenous gas industry,” Carlos said.