Shell PHL seeks extension of Malampaya service contract

Shell Philippines Exploration BV (SPEx) on Tuesday said it has submitted a request to extend Service Contract (SC) 38 and allow the operations of Malampaya gas field beyond 2024.

“There was a letter that was sent. I don’t remember the exacts dates, but I think it was in late 2018, informing the DOE and expressing our interest on having SC38 extended,” Kiril Caral, legal affairs manager at SPEx, told reporters in a press conference in Pasay City.

A unit of the Royal Dutch Shell PLC, SPEx leads the Malampaya consortium which counts Chevron Malampaya LLC, and the Philippine National Oil Company Exploration Corp. as members.

The Malampaya gas-to-power facility fuels three gas-fired power plants with a total generating capacity of 2,700 megawatts (MW)—providing up to 30% of the power generation needs of Luzon.

Connected to onshore gas plants in Batangas, the Malampaya offshore facility in Northern Palawan was inaugurated in 2001.

Estimates showed its gas reserves are sufficient only until 2022 to 2024.

SC38 is set to expire in 2024, but Caral said the group wants to have this extended in view of more areas nearby which could be explored.

“In SC38, there have been discoveries that are not yet being produced, so those are the logical areas where you can drill,” he said.

“There’s still gas after 2024, but the question is: How much? How fast we produce? And if we actually drill a new one,” Caral noted.

Caral said they have yet to receive feedback from the government regarding its request.

“They have not given a specific timeframe, but we are aware that the contract time expires in 2024. So it has to be earlier than that.”

GMA News Online has reached out to the Department of Energy (DOE) to comment on the consortium’s request, but no response has been received as of this posting.

In 2017, Energy Undersecretary Felix William Fuentebella cited the need to expand the country’s liquefied natural gas (LNG) capability to accommodate and shipments from overseas.

“By 2024, the Malampaya gas field is expected to be depleted … until 2027. There is a need to expand its facilities for LNG expansion and importation, and for further exploration,” Fuentebella said at that time.

Caral declined to share further details on the extension request, beyond saying that the contract may be extended for another 15 years.

“The request for extension was submitted and it’s something for the government to decide, and so it’s a matter of implementing … for the DOE to discuss and inform the Malampaya consortium on what it plans to do regarding the request for extension,” Caral said. —VDS, GMA News