Solon explains allure of aging Malampaya to business tycoons MVP, Uy

Published October 29, 2020, 6:37 PM

by Ellson Quismorio

Surigao del Norte 2nd district Rep. Johnny Pimentel believes he knows what makes the Malampaya deep-water gas-to-power project so alluring to businessmen despite it being already long in the tooth.

House Deputy Speaker Surigao del Norte Rep. Johnny Pimentel (MANILA BULLETIN FILE PHOTO)

Pimentel said the answer lies in Malampaya’s 504-kilometer, 24-inch diameter pipeline that delivers gas to landfall in Batangas, as well as the Sampaguita gas discovery in Recto Bank (formerly Reed Bank) some 250 kilometers southwest of Malampaya.

“The interest is clearly in Malampaya’s existing infrastructure, mainly its underwater pipeline, which could be used to transfer all the offshore gas in the West Philippine Sea to the onshore gas power plants in Batangas,” said the solon, who is a deputy speaker.

“Even if all of Malampaya’s resources eventually run out, the project’s pipeline could serve as the ‘toll road’ of all future gas that may be harvested from nearby reservoirs,” he pointed out.

Pimentel gave this assessment shortly after businessman Manny V. Pangilinan’s PXP Energy Corp. bared that it was bidding for the 45 percent stake of Royal Dutch Shell plc in the Malampaya project in Northwest Palawan.

This places PXP in a bidding war with businessman Dennis Uy’s Udenna Corp. Udenna earlier said it had first crack at acquiring Shell’s interest, after buying the other 45 percent from Chevron Corp. last year.

State-owned Philippine National Oil Company (PNOC) Exploration Corp. holds the residual 10 percent in Malampaya.

Last September, Shell bared plans to divest from Malampaya to  streamline and strengthen its business, amid the collapse of oil prices due to the COVID-19 crisis.

The now 19-year-old Malampaya gas-to-power project still generates up to 3,400 megawatts (MW) of electricity for the Luzon grid.

However, Department of Energy (DoE) officials previously told a congressional hearing that by 2024, Malampaya’s gas output would fall to just one-third of current capacity. This means that four years from now, Malampaya’s diminishing gas reserves would be able to produce just 1,100 MW of electricity for Luzon.

Based on an independent assessment by Weatherford Petroleum Consultants, the nearby Sampaguita field in Recto Bank “is estimated to contain 2.6 trillion cubic feet of in-place contingent resources and 5.5 trillion cubic feet of in-place prospective resources.”

The operator of the service contract that contains the Sampaguita gas discovery, Forum Energy Ltd., is controlled by PXP.