The Malampaya consortium led by Prime Energy Resources Development B.V. has programmed initial investments of $600 million under the recently renewed Service Contract (SC) 38.
Energy undersecretary Alessandro Sales, said on Tuesday this will fund the drilling of up to three exploration wells and a tieback production facility allowing the production of additional gas from the field in northwest Palawan by 2026.
“In total, for two wells and the tieback for production, this amounts to about $600 million. In terms of committed investment in the renewal contract itself, the work commitment is at least two new wells. In their submissions to us, they indicated preparations to drill for three wells and this is above the committed program for renewal contract,” Sales said.
The Department of Energy (DOE) said the consortium is convinced a three-well drill is more cost-effective as each one would cost $80 million to $90 million each.
Assuming the drilling succeeds, an additional $330 million to $360 million is required for tie-back and sub-sea facilities allowing the wells to produce the gas for the power plants, Sales said further.
The additional supply from the wells was estimated at some 210 billion cubic feet of gas.
Prime Energy as operator and consortium leader has a 45 percent stake. Udenna Corp. through UC38 LLC has 45 percent and the government through PNOC-Exploration Corp. has 10 percent.
Prime Energy as subsidiary of Prime Infrastructure Capital Inc. is chaired by businessman Enrique Razon Jr.
Energy Secretary Raphael Lotilla said this was the first extension ever granted of a natural gas producing service contract in the Philippines.
“We hope this would not be the last of its kind. That there are attractive prospects within the same service contract area worthy of an extension beyond the initial period shows promise in exploration activities in the Philippines,” Lotilla said.
He gave assurance that Prime Energy as operator has demonstrated technical competence the past six months by managing the declining gas supply and successfully undertaking maintenance activity.
“This confirms the findings of the DOE last year on the operator’s technical, financial and legal qualifications,” he said.
On Monday, President Ferdinand Marcos, Jr. approved the renewal of SC 38 for another 15 years or until February 22, 2039.
The Malampaya resource provides natural gas fuel for four power plants in Luzon with a combined capacity of 2,011 megawatts.
