As Razon-led Prime Infrastructure Capital Inc. (Prime Infra) is now anticipating government approval of a license extension for the Malampaya project, it absorbed at least 300 Shell Philippines Exploration B.V (SPEX) employees left by the Dutch firm as it formally exited the project last Tuesday, Nov. 1.

“A team of around 300 SPEX world-class employees joins the Prime Infra group bringing with them highly specialized skills and technical knowledge that will continue to operate the deep water gas-to-power project,” the Razon firm announced in a press statement.

Prime Infra noted that a two-day onboarding activity had been carried out for the Malampaya employees on their change of employment with the Razon group.

The company also announced that SPEX will be renamed Prime Energy Resources Development B.V. (Prime Energy), and that will serve as the operating entity for the continued operations of the Malampaya gas field.

“Prime Infra’s full ownership of SPEX is the culmination of the transition process for a safe and seamless handover of operations from Shell,” the Razon firm stressed.

As Prime Infra officially becomes the operator of the gas field facility, company Chairman Enrique Razon Jr. asserted that “the Malampaya asset begins a new chapter today as we continue to build on the legacy of this world-class installation in helping achieve national energy security and independence.”

The Service Contract (SC) 38 license for the Malampaya project will expire in February 2024, but the government, through the Department of Energy (DOE), had already given hints that a 15-year license extension will be accorded to the depleting gas field asset.

Once the service contract is extended, Prime Infra is expected to schedule the drilling of new wells – and it is only then that will be known if there would still be commercial-scale gas reserves that can be extracted from the field or if the asset’s fate will eventually be on its final retirement phase.

The Razon-led company indicated “to facilitate the seamless transition of the asset operations from Shell, Prime Infra established a team of commercial, change management and upstream industry experts.”

For the targeted license extension, it was previously conveyed by energy officials that the tenor of negotiations is being anchored on a 70:30 royalty sharing arrangement – with the Philippine government cornering the higher fraction of 70-percent; and the balance of 30-percent will be contractor’s share in the pie. The prevailing royalty sharing under SC 38 has been on a 60:40 ratio.

As calculated, the adjustment in the royalty sharing deal will generate higher revenue stream for the State at the scale of US$128 million yearly from previously at US$110 million on average.

There were also proposals of a three-year review of the extended contract, so there could be closer coordination with the government on the re-assessment of the reserves that can still be lifted from the gas production facility.