POWER DEAL | President Ferdinand Marcos Jr. signs the agreement extending the Malampaya Service Contract No. 38 on Monday, May 15, 2023. Among those who witnessed the signing are House Speaker Martin Romualdez (left) and Energy Secretary Raphael Lotilla. (MALACAÑANG PHOTO)
MANILA, Philippines — The Department of Energy (DOE) on Tuesday urged consumers not to raise their hopes too high that the contract extension of the Malampaya project would boost the power supply and prevent a looming shortage.
Lawmakers and other groups welcomed President Ferdinand Marcos Jr.’s signing of the renewal agreement for Service Contract No. 38 on Monday, allowing the Malampaya consortium to operate for another 15 years, or until February 2039, and requiring it to search for new gas deposits to augment the Malampaya field’s depleting reserves.
However, Energy Secretary Raphael Lotilla warned that there was no assurance that the exploration activities in the area covered by SC 38 in offshore Palawan would yield additional gas supply.
“Insofar as finding oil and gas is concerned, [there are] no certainties so that’s why the risks are high,” Lotilla said.
While the consortium members — ports tycoon Enrique Razon Jr.’s Prime Energy Resources Development BV, Davao-based businessman Dennis Uy’s Udenna Corp., and the state-owned PNOC Exploration Corp. (PNOC-EC) — passed the DOE’s technical, financial and legal evaluations, Energy Undersecretary Alessandro Sales added that the consortium needed to invest as much as $600 million to explore and develop potential gas fields near Malampaya.
Exploratory wells
Under the renewal contract, the consortium must drill at least two exploratory wells from 2024 to 2026, although Sales said it had committed to undertake three such activities that would cost about $240 million to $270 million.
The official noted that an additional investment of at least $330 million would be needed to fund the facilities needed to connect the wells—assuming gas would be found—to the existing Malampaya production platform.
If he had his way, Lotilla said he wanted the drilling to start “as soon as possible.”
“We cannot wait for 2024. If it takes three to four years to drill successfully and then get the gas flowing and we start only in 2024, what is going to happen? We would have lost a lot of time,” he said.
Lotilla also said that any shortfall from the Malampaya gas field must be supplemented by new liquefied natural gas projects and imports, especially as the 1,200-megawatt Ilijan gas-fired power plant in Batangas province is getting back online later this month.
“This is what we are focusing our attention on now because we want to ensure that these will be available for the Ilijan power plant,” he said.
More questions
The Malampaya gas field has been supplying natural gas to four power plants in Batangas — Santa Rita, San Lorenzo, San Gabriel, and Avion — that provide a fifth of the country’s power needs.
Meanwhile, environmentalist group Greenpeace on Tuesday assailed the extension of the Malampaya contract, saying, “This latest move has locked us in long-term to fossil gas — a dirty, dangerous and costly energy source.”
Greenpeace campaigner Khevin Yu, in a statement, said that the extension was “as unrealistic as it is risky.”
“Previous studies have already projected the depletion of the gas field as early as next year and fossil gas also produces emissions that greatly contribute to the worsening climate crisis,” he stressed.
Yu added that the price of renewable energy such as wind and solar “continues to be more competitive than that of fossil fuels.”
In Congress, a Makabayan lawmaker said the renewal agreement for Malampaya only raised more questions instead of assurances that it would prevent a looming power crisis.
Concern
House Assistant Minority Leader Arlene Brosas expressed concern that giving the project’s proponents another 15 years “reverses a long-held claim that reserves” at Malampaya gas field “will soon be depleted.”
Brosas added that the renewal of SC 38 would only “temporarily allay fears of a power crisis and will not assure (consumers) of cheaper electricity rates unless the privatization of Malampaya and the entire power sector in the country is reversed.”
“It’s not enough to ensure that there is adequate supply of electricity that can be sourced from the Malampaya reserves. What should be addressed is returning control of Malampaya to the government and ensuring that profits from Malampaya are enjoyed by our citizens,” she said.
Brosas said the Makabayan bloc would also file a measure seeking to centralize the proceeds from Malampaya to the general fund for appropriation by Congress to reduce its vulnerability to corruption and misuse.