The revenues yielded by the country’s Malampaya gas production facility already topped $11.9 billion (equivalent to P573 billion at prevailing peso-dollar exchange rate) with the national government getting the bulk with a share of P325 billion as of end-December 2020, according to the Department of Energy.
As a minority shareholder, state-run Philippine National Oil Company-Exploration Corporation (PNOC-EC) remitted P20.8 billion in dividends to the Bureau of the Treasury last year.
PNOC-EC President and CEO Rozzano D. Briguez noted that the $11.9 billion revenues from the Malampaya venture, “exceeded the initial projected revenues of $10 billion for the entire project duration.”
The Malampaya field started producing gas for various power projects in the country in 2001; and its Service Contract (SC) with the Philippine government will lapse in 2024.
Briguez said the Malampaya project strategically positioned the PNOC-EC as a “major contributor to the national coffers” because of its 10 percent stake in the commercially producing gas field.
Beyond that, he highlighted that the major value-adding impact of the Malampaya venture had been on the enhancement of the skills set and expertise of Filipinos in upstream petroleum ventures – anchored mainly on the technology transfer and training that foreign partners had brought into the project.
“The public-private ownership promoted patronage of the project because of the opportunities it provided for the Filipino workers. PNOC-EC also developed its capabilities though exposure to oil and gas industry best practices for deep water operations and raise awareness on safety as well as technology industry experts and skills,” Briguez stressed.
He added their joint venture partners – foreign firms Chevron and Shell – opted to tap local knowledge in the continuing operations of the gas field, and it somehow showed that the private sector could efficiently bridge the gap on what the government would not have been able to deliver on such scale of oil and gas investments.
“PNOC-EC’s involvement and participation in Malampaya has created diverse opportunities for its personnel to learn not only just theory, but practice hands-on and acquire knowledge on how to implement oil and gas projects…in doing so, it enables and empowers our people to take on similar projects in the future, while simultaneously passing their knowledge and experience to the next generation of Filipino professionals,” Briguez emphasized.
He further hinted that PNOC-EC is currently “looking at a very good prospect,” but he stopped short of naming that block pending preparatory works still being sorted by the company and its targeted partners.
Briguez nevertheless pointed out there are still challenges yet to be resolved, including legal setbacks, before next phases of well drillings could advance in line with the country’s continuing search for the next Malampaya.
Energy Undersecretary Felix William B. Fuentebella indicated that while the DOE continues on its investment-offers of service contracts in the oil and gas sector, “we have to be candid that there are also a lot of legal challenges that go with exploration.”
He stated in particular that all petroleum SCs awarded by the government, through the DOE, have legal questions hanging over them because of a legal case on the previous service contract of Japan Petroleum Exploration Company (JAPEX) that raised question before the Supreme Court on who shall act as signatory of service contracts – whether it shall be the Secretary of Energy or the President of the Philippines.
“We have been inviting investors to look into the exploration program of the country, not only for natural gas but also for oil…but there are a lot of challenges,” Fuentebella stressed.
Briguez echoed the legal hurdles as drawbacks to forthcoming investments in the upstream petroleum sector, and that’s the reason, he said that “we cannot give our very optimistic views at the moment.”
Aside from legal hurdles, the country is also distressed with diplomatic tensions at the West Philippine Sea – and these disputed territories straddle some of the known gas-rich blocks.
Briguez likewise cited the ‘low prospectively’ of many blocks on tender if compared to the prospects dangled by Southeast Asian neighbors; and that has been contributing to high risks that investors will be confronted with in the oil and gas sector in the Philippines.