DOE dismisses PXP Energy’s proposal to develop Malampaya

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The Department of Energy (DOE) dismissed PXP Energy Corp.’s request to reconsider its unsolicited proposal to take over the operations of the Malampaya gas field from the consortium once the service contract (SC) expires.

According to a BusinessMirror report, the energy corporation offered to develop and utilize an integrated gas hub (IGH) at the site of the Malampaya project in Northwest Palawan to which the DOE immediately dismissed, stating that the proposal cannot be accepted because the service area covered by SC 38 is still subject to a valid and existing contract which expires in 2024.

“As to the reconsideration being sought by PXP on their unsolicited proposal for the strategic development and utilization of an IGH for Malampaya, DOE maintained its position that it cannot accept or entertain any proposal for an existing service contract,” DOE’s Energy Resource Development Bureau (ERDB) stated in the report.

At present, the Malampaya gas field is being maintained and operated by a consortium led by Shell Philippines Exploration BV, Chevron Malampaya LLC, and Philippine National Oil Co. – Exploration Corp. (PNOC-EC).

“We advised PXP that we cannot be cognizant of their proposal. The reason is very basic. We have Philippine Conventional Energy Contracting Program (PCECP) and, under that legal framework, there are only two ways in order to get a service contract and oil exploration permits,” Energy Assistant Secretary Leonido Pulido expressed.

Per PCECP regulations, investors may engage in upstream exploration or development activities in two ways: choosing an area from the 14 predetermined areas (PDAs) suggested by the DOE, or proposing their own areas for exploration.

“There are only two ways. There is no third mechanism. What they are trying to do is create a third mechanism, which is unsolicited proposal. You cannot nominate an area that is already covered by a service contract. SC 38 is already covered by an existing contract so we can’t take cognizance of their unsolicited proposal. We have to refuse it and we already advised them on that,” Pulido further explained.

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