Senators seek probe on issues surrounding looming expiration of Malampaya gas field service contract

Published October 14, 2020, 1:34 PM

by Hannah Torregoza 

Senators have sought an inquiry into the issues surrounding the looming expiration of the service contract for the Malampaya gas field amid reports of a dwindling supply of natural gas from the oil-rich reservoir.

Sen. Vicente Sotto III (Senate of the Philippines / MANILA BULLETIN)

Senate President Vicente Sotto III,  Senators Panfilo Lacson and Sherwin Gatchalian said the Senate needs to be apprised of the government’s plan for Service Contract (SC) 38 or the Malampaya Deep Water Gas-To-Power Project given its critical role in the country’s energy security.

Gatchalian said the surrounding areas of Malampaya is said to be vastly rich in oil and natural gas and exploring it at this point could prepare for oil production by the time its gas supply is depleted.

“We’re looking at the larger picture which is the energy security of the country. So we have to make sure that whoever takes over that portion of Shell should have the technical capability,” Gatchalian said.

“They should be able to demonstrate that they can operate this rig competently with technical expertise, and in the future, if ever that area has potential, they should be able to demonstrate that so they can explore and develop that area,” he added.

Under Senate Resolution No. 533, the Senate will look into the compliance of the government and the consortium with Presidential Decree (PD) No. 87, the Oil Exploration and Development Act of 1972, and the impending sale of the 45 percent stake of Shell Exploration B.V. (SPEX) which is also crucial since SPEX is the operator of the platform.

Aside from the 10 percent stake of the Philippine National Oil Corporation-Exploration in Malampaya, the 45 percent stake is now under Udenna Corporation’s subsidiary, UC Malampaya Philippines.

“We’re looking at the larger picture which is the energy security of the country. So we have to make sure that whoever takes over that portion of Shell should have the technical capability,” the chief of the Senate Committee on Energy explained.

Under PD 87,  the senator said the government may directly explore for and produce indigenous petroleum. It may also indirectly assume the same service contracts, provided that the contractor is technically competent and financially capable to undertake the operations.

Currently, Malampaya is the country’s primary local source of energy powering five power plants as it accounts for 20.08 percent of power generation in the entire country and 29.3 percent of power generation in Luzon.

It has given the government more than P261-billion from January, 2002, to December, 2019, and is a crucial source of funding for various energy resource development programs and initiatives.

Due to its declining output, Gatchalian said the Senate should look into whether or not the service contract should be extended or if the government should opt to manage and operate it.

“This isn’t a plain and simple business transaction. It affects all of us because of energy security issues. We want to be assured that we  will not run out of fuel supply in the immediate future,” he added. 

 
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