Malampaya gas prod’n starts to decline

Published February 16, 2020, 12:00 AM

by manilabulletin_admin

By Myrna M. Velasco

Growth in the Malampaya gas field production ended flat in 2019, but sets clear indication that it is still far from the forecasted probable massive decline in 2022.

Data from the Department of Energy (DOE) had shown that gas yield from the country’s only commercial gas field hovered at 150.495 billion standard cubic feet (scf) last year, almost the same level or just down very slightly from 2018 output of 150.804 billion scf.

Of the total production, Philippine gas consumption stood at 149.007 billion scf in 2019 – with the biggest share going to power generation at 146.365 billion scf; then the balance cornered by industrial users at 2.642 billion scf.

The country has five gas-fired electricity generating facilities with aggregate capacity of 3,211 megawatts and are relying heavily for fuel on the Malampaya field – specifically the 1,200MW Ilijan; 1,000MW Santa Rita; 500MW San Lorenzo; 414MW San Gabriel and 97MW Avion plants.

The Malampaya field is a major revenue-generating venture for the government, with yearly remittance of $800 million to $1.0 billion annually to the national coffers.

Two key developments are anticipated happening relative to the Malampaya gas project – one is the targeted entry of businessman Dennis Uy once he concludes his 45 percent purchase deal on the interest of American super giant Chevron; and the other is the expiration of the project’s Service Contract (SC) 38 in 2024.

On the last development, the operators and owners of the gas-fed power generating assets of the country are already prepping for the installation of import facilities for liquefied natural gas (LNG) so their fuel needs could be met even beyond the life cycle of the Malampaya field.

In addition, the Department of Energy (DOE) is vigorously pursuing fresh round of petroleum contracting on the intent of discovering the next oil/gas field that could replace Malampaya.

But the government-designed Philippine Conventional Energy Contracting Program (PCECP) is not coming as an easy game plan for the DOE, with Assistant Secretary Leonido Pulido III noting that the county’s oil and gas blocks had not been as attractive because of array of concerns: One is the very low prospectivity of the gas blocks or what he terms as “frontier prospects”; the protracted territorial dispute that the country has with China; and the fixes that have yet to be done in the investment policies for the sector.

According to previous studies of the DOE, the chance of petroleum recovery in the Philippines is very marginal – at just the rate of 10 to 20 percent; while other countries even in the ASEAN region have higher prospects.

Notably, since the escalation of diplomatic tension at the West Philippine Sea, capital flow in the Philippine upstream oil and gas sector had likewise been relentlessly dwindling.

After reaching a high of $798.671-million oil and gas investments in 2010, new capital inflow dipped by roughly half to $406.454 million in 2011; further lower to $268.790 million in 2012. In 2013, investments recovered to $831.248 million but mainly due to the additional capital outlay into the Malampaya project to reinforce its gas production capacity.