PH still open to exploration of untapped gas fields

MALAMPAYA GAS FIELD. The Malampaya gas field in Palawan. There are still many potential areas in the country, not just Malampaya, that have huge gas deposits, Energy Undersecretary Alessandro Sales said in a news forum in Quezon City on Saturday (May 20, 2023). (File photo: Wecom via PNA)

MANILA – The Philippines is open to exploring the potential gas fields that remain untapped, the Department of Energy (DOE) said on Saturday.

In a bid to meet the energy requirements, DOE Undersecretary Alessandro Sales said the doors are still open for investors interested in tapping the country’s potential power resources.

“Ang more important thing dito ay ‘yung signaling natin din, that ang oil and gas exploration po sa Pilipinas ay bukas (The more important thing is the Philippines’ openness for oil and gas exploration),” Sales said during the Saturday News Forum in Quezon City.

“Marami pang mga lugar, hindi lang po Malampaya ang mayroon mga potential para sa malalaking gas deposit (There are still many potential areas in the country, not just Malampaya, that have huge gas deposits),” he added.

Sales issued the statement as he acknowledged that the pending case lodged before the Supreme Court regarding the issue of income tax involving the Malampaya gas project had discouraged potential investors from entering into oil exploration deals.

“Ito ‘yung kaso ng income tax ng mga service contractor. Hanggang ngayon, hindi pa ito nare-resolve at nagiging malaking overhang sa mga potential investors (This is the case concerning the income tax of service contractors. Until now, it is yet to be resolved and serves as overhang for potential investors),” he said.

The taxation issue of upstream petroleum investors stemmed from an interpretation by the Commission on Audit (COA) that the income tax payment of the Malampaya consortium should not have been charged as part of the 60 percent royalty share of the Philippine government.

The consortium is currently composed of Prime Energy Resources Development, UC38 LLC, and PNOC Exploration Corp.

Sales said the government is supportive of upstream exploration and production of oil and gas, despite the country’s full commitment to decarbonization.

On Monday, President Ferdinand R. Marcos Jr. approved the extension of Service Contract No. 38 for the Malampaya Deep Water Gas-to-Power Project until Feb. 2039.

The renewed Malampaya natural gas field service contract will add at least USD600 million worth of investments for drilling two wells and subsea facilities, Sales said.

Sales said a contract renewal has to be signed to produce the remaining gas reserve after 2024.

“It’s about 80 to 140 BCF (billion cubic feet) that would have been stranded if the contract was not renewed. In the renewal agreement, it is also required that the consortium conduct near field appraisal and development. This is to add reserves and increase the production of the Malampaya field,” he said.

“Initially, based on technical review, potentially there is an additional 210 BCF that can be developed close to the existing Malampaya field. So this would require drilling of wells and substantial subsea work to tie back the new production wells into the existing Malampaya production facilities. So this is a firm commitment as part of the renewal agreement,” Sales added.

The Malampaya gas-to-power project is one of the country’s vital power assets, being the only natural gas field in the country. It was discovered in 1989, but operations started in 2001, in which the initial license is set to expire in February 2024.

Malampaya supplies 20 percent of Luzon’s total power requirements by supplying clean natural gas to five power plants — the 1,200-megawatt (MW) Sta. Rita power plant, the 500-MW San Lorenzo power plant, the 1,200-MW Ilijan power plant, the 414-MW San Gabriel power plant, and the 97-MW Avion power plant.

The Malampaya project is seen to reduce the country’s dependence on oil imports and ensure a more stable supply of cleaner energy from an indigenous source.