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Malampaya contract renewal expected to contribute $60 million in investments

The Department of Energy (DOE) said Tuesday that the extension of the Malampaya natural gas field service contract will add at least USD600 million in investments for drilling two wells and subsea infrastructure.

During a virtual press conference, DOE Undersecretary Alessandro Sales stated that the SC 38 Consortium is planning to invest between USD80 million and USD90 million to drill one well.

The first phase’s work program commitment calls for the Consortium to drill at least two wells.

Since drilling more wells is more cost-effective, they state in their submissions that they are prepared to drill for three.

He estimated that the Consortium would need to invest an additional USD330 million to USD360 million on tieback and subsea facilities in addition to good drilling.

Sales said these infrastructures would deliver the natural gas needed for the Malampaya facility’s production.

He calculated that Malampaya’s gas-to-power project would produce an additional 200 billion cubic feet of natural gas if its contract were extended.

DOE Secretary Raphael Lotilla said his office would push for early drilling in the Malampaya region to keep the gas flowing and fulfill the nation’s increasing energy needs.

“We need to get going as quickly as possible. Since drilling and flowing gas successfully takes two to three or even four years, we cannot wait till 2024. What will happen if we only begin in 2024? We would have wasted a great deal of time, remarked Lotilla.

The Malampaya Service Contact No. 38 (SC 38) Renewal Agreement was signed on Monday by President Ferdinand R. Marcos Jr. for a final 15 years, or until February 22, 2039.

The gas-to-power project is meeting twenty percent of Luzon’s electricity needs.

Malampaya has paid the national government PHP374 billion in royalties since it started operating, with shares of PHP26 billion in 2022.

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