The Senate inquiry on the impending expiration of Service Contract 38 or the Malampaya Deep Water Gas-to-Power Project, along with issues surrounding its operation and management, has been set on Tuesday, November 10.
Senate Energy Committee Chairman Senator Win Gatchalian, one of the proponents of the resolution on the conduct of an inquiry in aid of legislation, emphasized the need to look into the energy security of the country in anticipation of the expiration of the Malampaya natural gas field in 2024 and the eventual depletion of supply from the Malampaya gas field sometime between 2027 and 2029.
In filing Senate Resolution No. 533, Gatchalian, along with Senate President Vicente C. Sotto III and Sen. Panfilo Lacson, said Malampaya faces a number of issues specifically on the lack of direction from the government on SC 38 given its expiration in 2024 or whether or not the government will manage and operate it. Other issues hounding Malampaya is the projected 4.49% decline in natural gas production from 2019 to 2020, as well as the impending sale of the 45% stake of Shell Philippines Exploration B.V. (SPEX), which is crucial since SPEX is the operator of the platform.
“It’s an energy security issue,” Gatchalian said, who emphasized that Malampaya accounts for 21.08% of the country’s electricity requirements and 29.3% of power generation in Luzon.
“We have to make sure that whoever takes over that portion of Shell should have the technical capability. They should be able to demonstrate that they can operate this rig competently with technical expertise and in the future, if ever that area has potential, they should be able to show that they can explore and develop that area,” the senator stressed.
“My point of the matter is that we, being citizens of this country, deserve to understand whether the new owners can assure us of energy security,” he further emphasized.
SC 38 is a consortium of SPEX, UC38 LLC, and state-run Philippine National Oil Company Exploration Corp. (PNOC EC) which holds the remaining 10% interest.
“We want to understand the transaction, how it affects us, and the potential of SC 38. There are talks that SC 38 might have other potential wells so we will look into that, as well as who will explore those potential wells,” Gatchalian explained.
Among the reported prospective buyers of SPEX’s interest are the Udenna Corporation of Davao-based businessman Dennis Uy and San Miguel Corporation. PXP Energy Corporation of businessman Manny Pangilinan proposed to take over the operations of Malampaya from the consortium once SC 38 expires but was rejected by the Department of Energy (DOE).