The Department of Energy (DOE) has been in talks with the consortium-members of the Malampaya gas field project on prospects of retaining the oil-linked gas pricing formula in the targeted new gas sale and purchase agreements (GSPAs) that shall be cemented for the 15-year service contract extension enforced for the facility.

“The pricing formula is not being proposed to be changed… that is one pricing formula that has remained stable and actually provides a cushion for the people over the 20-year period that the formula has been in place,” Energy Secretary Raphael P.M. Lotilla said.

He further noted that “the price of Malampaya on average is lower than imported LNG (liquefied natural gas).So that has been an ‘unmentioned gift’ to the Filipino people that’s why we are encouraging the natural gas exploration, so this can continue to cushion the power prices for the country.”

Lotilla conveyed that Energy Undersecretary Alessandro Sales is the one leading the discussions with the private sector – and that includes the Malampaya consortium and the targeted buyers of any additional gas that can still be extracted from the gas field.

The energy chief hinted that the tenor of talks is for the GSPAs to have duration that will be parallel to the 15-year extension in Malampaya’s service contract.

To note, the first 25-year stretch of the Malampaya contract will expire February this year; along with the GSPAs for the gas output from the field; hence, supply contracts will have to be cemented for the remaining gas that can still be lifted from the facility as well as for future volumes that could be discovered commercially from the field.

At this stage, he emphasized that the plans of Prime Energy and the other shareholders in Malampaya for new round of seismic survey and the drilling of at least two wells are ‘on track’; with the exact schedule to be largely dependent on the availability of rigs that they can contract for such activities.

“As far as the drilling program for Malampaya, it is on stream,” the energy chief stressed, specifying that the signing of GSPAs will be a succor to the fresh round of investments that the consortium-members will be undertaking for the project.

He added “preparations are ongoing, but the exact schedule will be towards 2025 or 2026 – so that hopefully, there will be gas flowing by 2026. But of course, these are things that need to be worked on – like scheduling the drillings and everything else has to be in place.”

The energy chief conveyed “what we’re doing in fact is to make sure that the power supply agreements and the gas supply purchase agreements will be in place so that can support the further development of Malampaya.”

He similarly qualified that “any drilling will have to be funded by the income flows from the current operation of Malampaya, so these are things that we will continue to pursue and we are dealing with in the private sector.”