TABANGAO—The Malampaya consortium is investing $1 billion to extend the life of the Malampaya gas field by another 15 years until 2039.
On Tuesday Shell Philippines Exploration B.V. (SPEX), which operates Service Contract 38,+ otherwise known as the Malampaya gas field, signed the basic design and engineering package for the second and third phases of development of the field.
SPEX signed the front-end engineering contract with Fluor Daniel Inc. Philippines on behalf of the consortium in ceremonies witnessed by President Aquino and Energy Secretary Jose Rene Almendras who visited the onshore gas-processing plant.
The President later gave assurances that the Malampaya project would not cause any problems with China.
He said the government would protect the country’s territory to ensure that it would not lose any of it, and that “any map would clearly show that the [Malampaya] gas fields are closer to us compared to China.”
SPEX and Chevron Malampaya Llc. each has a 45-percent stake in the project; the Philippine National Oil Co.-Exploration Corp. owns the remaining 10 percent.
Energy Undersecretary Jose Layug Jr. told reporters the Malampaya consortium is finalizing its proposal for additional gas sales and the expansion of the compressed natural gas (CNG)-bus pilot project.
“We’re waiting for their final proposal, perhaps in two to three weeks. We will finalize it and then consider their application for license extension,” Layug said. The approval of the extension would depend on the
consortium’s proposal, he also said.
Based on Camago-Malampaya data done last year, Layug said the volume of the reserves has become more certain. He said the consortium would now be able to determine how much more gas can be sold without prejudicing its existing gas-sales contract with three gas-fired power plants in Batangas—the 1,000-megawatt (MW) Sta. Rita, the 500-MW San Lorenzo and the 1,200-MW Ilijan power facilities.
Layug said the project cost was downscaled to $1 billion instead of the $1.5-billion estimate that was earlier quoted. Based on presentation, the second phase would cost about $250 million, while the third phase would cost about $750 million.
“Originally, Shell was looking at between $1 billion and $1.5 billion. Over time Shell will be able to determine with more certainty how much would be the cost, always when we talk to them we want them to reduce the cost,” Layug said.
The Malampaya field is estimated to have gas reserves ranging from 2.7 trillion cubic feet to 3.2 trillion cubic feet. Layug said the country has already used 1 trillion cubic feet.
The second phase entails the drilling and development of additional wells by 2014; the third phase will involve the installation of a new platform where additional equipment and facilities will be housed by 2015.
The Malampaya field was earlier estimated to produce gas until 2024, which prompted the consortium to explore for more gas in its service contract in northwest Palawan.
In giving his reassurances about Malampaya, the President also said he believes the situation in the South China Sea would not lead to confrontation as the world would surely frown upon China if it bullied the Philippines to resolve claims over disputed areas in its favor.
On Tuesday afternoon Mr. Aquino met with Chinese Assistant Foreign Minister Liu Zhenmin, accompanied by Ambassador Liu Jianchao, who delivered a message from Chinese President Hu Jintao.
“We confirm that the President received the warm and cordial message from Assistant Foreign Minister Liu Zhenmin,” Presidential Spokesman Edwin Lacierda said in a statement. Lacierda, who was at the meeting, declined to divulge what transpired during the hourlong meeting.
(With Mia Gonzalez)
