Uy-led Udenna Corporation has committed to fulfill its contractual obligation under Malampaya’s Service Contract 38 (SC38) to extract the P30 billion to P35-billion worth of ‘banked gas’ for state-run Philippine National Oil Company (PNOC)
According to Udenna President Raymundo Martin M. Escalona, “SC 38 has a contractual obligation to provide the gas to PNOC per an off-take contract.”
It could be recalled that the presumptive buyer of the banked gas, as stipulated in a prevailing memorandum of agreement (MOA), is government-run firm Power Sector Assets and Liabilities Management Corporation (PSALM), which is targeting to utilize that for the Ilijan gas-fired power facility.
The build-operate-transfer (BOT) contract of the Ilijan plant will lapse by June next year. But PSALM has yet to announce formally if the power generating asset will be turned over to South Premiere Power Corporation (SPPC) of the San Miguel group, which is the asset’s independent power producer administrator (IPPA) or the entity that managed its supply contract when it was privatized by the government in 2010.
PSALM previously indicated that it will be signing a deal with PNOC for the purchase of the banked gas if the latter can give assurance that the gas can still be drawn from the Malampaya field.
As culled from Department of Energy (DOE) documents, the banked gas for PNOC hovered at 95 billion cubic feet (BCF). It will need at least eight years for it to be extracted at yearly increment of 12.17 BCF.
The need to produce the ‘stranded banked gas’ of PNOC was among the key factors being invoked in the targeted license extension of the Malampaya gas venture.
Escalona qualified that discussions on the proposed Malampaya license extension is still ongoing and is led by Shell Philippines Exploration B.V. (SPEX), being the prevailing operator of the gas project.
By the end of this year, the operatorship of the Malampaya field is targeted for turnover to Malampaya Energy XP Pte Ltd., the corporate vehicle of Udenna that bought the 45-percent stake of Shell in the gas field venture.
The closing of the Shell shares’ sale transaction to Udenna, which was initially cemented legally by the relevant parties in May this year, will be on or before December.
There are anticipations that the license extension for Malampaya will also be decided before the end of the Duterte administration. Once done, this will pave the way for Udenna to enter into new exploration activities so it can extend the production life cycle of the field.