Gov’t gets $1.1-B share from Malampaya project | Inquirer News

Gov’t gets $1.1-B share from Malampaya project

/ 01:45 AM January 21, 2012

The government on Friday received $1.1 billion (more than P43 billion) as its share in royalties for 2011 from the Malampaya gas project.

President Benigno Aquino III accepted the mock check for exactly $1,134,669,157, from Shell Phil. country manager Edgar Chua in a ceremonial turnover at Malacañang on Friday.

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“The project is a joint venture so that government has a share and it is given every year. The $1.1 billion is the total for 2011,” Energy Secretary Jose Rene Almendras said.

Almendras hoped the project would bring in the same huge returns in future years, providing the price and quantity of gas produced would be stabilized.

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“Hopefully, the supply will continue, and if the price stays as it is that should be the quantity that we should be getting,” Almendras said.

Expected to shrink

However, he expects the government’s share to shrink once the project embarks on an investment program for Phase 2 and 3 of the project, “so that we can get more gas and prolong the supply of gas because we need as much gas as we can.”

Almendras said the $1.1 billion would go directly to the Malampaya Fund that is being managed by the Department of Finance.

According to Budget Secretary Florencio Abad, the Malampaya Fund has a specific purpose in law, which is to fund energy developments, or for other purposes approved by the President.

P88B as of Sept. ’11

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Abad on Friday said the Malampaya Fund stood at P88 billion as of September 2011. With the addition of the $1.1 billion, or about P49.5 billion, the fund would increase to P137.5 billion, he said.

According to the records of the Department of Budget and Management as of May 2011, P105.95 billion in royalties have been received from the Malampaya project since 2002.

As of May 2011, P26.47 billion has been disbursed: P3.95 billion to the provincial government of Palawan; and P22.52 billion to national government agencies. Of this amount, P2.87 billion was released in 2011.

Total royalties

Data from the Department of Energy (DOE), the lead agency for the project, showed that the government has received a total of P228.45 billion from the Malampaya project since the complex began producing natural gas commercially in 2002.

The amount represents the royalties turned over to the government as of November 2011, data from the DOE showed.

Under the service contract agreement, 70 percent of the gross proceeds from the sale of natural gas goes to the contractor to recover the investment cost. The remaining 30 percent is to be shared by the government and the consortium on a 60-40 basis, respectively.

Status of fund

“We really have to be prudent whenever charging against the Malampaya Fund because of its impact on our fiscal health,” Abad said in a statement issued in May 2011 on the status of the fund.

He said the money from the fund was being used “reasonably and rationally” under the Aquino administration.

“So far under the Aquino administration, we have charged P2.87 billion from the fund for necessary energy-related expenditures,” he said.

These expenditures as of May 2011 include P2 billion for fuel requirements of the National Power Corp.-Small Power Utilities Group, to avert a power shortage in off-grid areas; P450 million for the Pantawid Pasada program, in direct subsidies to jeepney and tricycle drivers affected by the recent spate of oil price hikes; and P423 million for the purchase of a Hamilton-class marine vessel from the United States to strengthen the security perimeter of the Malampaya Natural Gas Project.

First gas undertaking

The Malampaya gas field project off Palawan is the first undertaking of its kind in the country to draw natural gas from beneath Philippine waters. The gas generated from the project fuels three natural gas-fired power stations with a total generating capacity of 2,700 megawatts to provide 40 to 45 percent of Luzon’s power generation requirements.

Malampaya is a joint undertaking of the government and a private consortium. It is operated by Shell Phil. Exploration on behalf of joint venture partners Chevron Malampaya and the PNOC Exploration Corp. Shell owns a 45-percent stake of the service contract for Malampaya. Chevron Malampaya owns the other 45 percent while PNOC Exploration Corp. holds the remaining 10 percent.

Also present at Friday’s ceremonies were Finance Secretary Cesar Purisima, PNOC Chair and CEO Gemiliano Lopez, Shell Phil. managing director Sebastian Quinones Jr. and Shell Phil. assistant manager Sabino Santos.

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