Marcos renews Malampaya contract for another 15 years
Credit to Author: Richmond Mercurio| Date: Tue, 16 May 2023 00:00:00 +0800
MANILA, Philippines — President Marcos has allowed a 15-year extension of the government’s contract with a consortium operating the Malampaya deep-water gas-to-power project, a development seen to ensure energy security for the country.
The Chief Executive signed at Malacañang yesterday the renewal agreement for Service Contract No. 38 for 15 more years until Feb. 22, 2039. The project was supposed to expire on Feb. 22 next year.
The renewal of the 25-year contract will allow for the continued production of the Malampaya gas field and ensure that the remaining gas reserves are further explored and used, according to the Department of Energy (DOE).
Speaking during the signing of the renewal agreement, Marcos said the project would reduce the Philippines’ dependence on oil imports and ensure a more stable supply of cleaner energy from an indigenous local source.
He described the renewal as “a very significant milestone” and a “huge endeavor” that promises “monumental rewards” for the country and its people.
“As we renew Service Contract No. 38, we optimistically look forward to the continued production and utilization of the remaining reserves of the Malampaya gas fields as well as further exploration and development of its untapped potential,” Marcos said.
“As I sign this SC (service contract) 38 renewal agreement, we also lay stress on the administration’s commitment to actively pursue the exploration, development and utilization of the country’s indigenous energy resources, and to optimize our energy mix,” he added.
Marcos noted that the policy that paved the way for the project was first laid down in 1972 through Presidential Decree No. 87 issued by his late father and namesake.
The elder Marcos’ issuance sought to promote the discovery and production of indigenous petroleum and provide more incentives to prospective service contractors.
“It is consistent with the Constitution and our state policy of hastening the discovery and production of the country’s indigenous petroleum,” the President said.
According to Marcos, the Malampaya deep water gas power project has been a boon to the Philippines since its commissioning in 2001, providing 20 percent of Luzon’s energy needs. Through the project, the government was able to generate P374 billion revenues, P26 billion of which was earned in 2022 alone, he added.
The consortium has been remitting 60 percent of the net proceeds from petroleum operations to the government. The consortium has remitted more than $13.14 billion to the government from October 2001 to December 2022.
“Because of the contract renewal, the government will continue to generate revenues from the project through a favorable sharing scheme with a private sector partner and the government,” Marcos said.
The President said he is confident in the capability and competence of the consortium handling the project.
Comprising the consortium are Prime Energy Resources Development B.V. of tycoon Enrique Razon, UC38 LLC of the Udenna Group and state-run Philippine National Oil Co.-Exploration Corp.
“So once again, we look to the DOE to see that the project’s implementation is strictly monitored and to make sure that the consortium’s goal is always aligned with the Philippine national interest,” he said.
In a statement, the DOE said the Service Contract No. 38 consortium is required to continue production operations, as well as conduct a minimum work program consisting of geological and geophysical studies and drill at least two deep water wells during the sub-Phase 1 from 2024 to 2029. – Delon Porcalla