Malampaya faces shut down with new DENR standards


The country’s oil and gas industry may shut down due to the new standards set by the Department of Environment and Natural Resources, an industry official said yesterday.

Shell Philippines Exploration B.V. (SPEx) managing director Sebastian Quiniones said the new Water Quality Guidelines and General Effluent Standards issued by the DENR as administrative order 2016-08 in May are currently only found in the Philippines, with no technologies available to enable industry players to comply.

“Companies like Shell will comply with the laws, but if we cannot comply we will shut down operations. If it becomes executory, we have been told that these new effluent standards, must be complied. However, there’s no available technology yet that can allow us to satisfy the rules, so Malampaya will shut down,” he said.

“We’re waiting for our instructions from our supervisor, the DOE. Until the DOE tells us otherwise, that it’s an implementable law, we (Malampaya consortium) go on,” he added.

Quiniones also presented a list of challenges that Malampaya consortium and the entire industry is facing.

The most glaring problem remains to be the consortium’s tax dispute with the Commission on Audit (COA).

SPEx and the Chevron Malampaya LLC are part of the consortium with 45 percent each, while the Philippine National Oil Company (PNOC) has 10 percent.

Based on the findings of the COA investigation in 2009, the consortium owed P53.14 billion in uncollected taxes. This was upheld in an April 2015 decision.

“The Malampaya consortium has always complied with all laws and regulations and we have, since inception, followed the law. So from our perspective, we’re fully compliant with the law,” Quiniones said.

As of end-2015, the uncollected payment ballooned to P130 billion, and has risen to P151 billion as of June this year, COA-DOE supervising auditor Flovitas Felipe said.

The Royal Dutch Shell’s Philippine unit has already filed two arbitration cases with the Singapore International Arbitration Center last year, and the International Center for the Settlement of Investment Dispute in July.

The consortium sought the help of DOE Secretary Alfonso Cusi, who ordered the case to be reviewed.

“I need to look at documents, I cannot just rely on the stand of previous [administration]. There are a lot of industries linked to this case. So we have to be careful in forming our stand,” Cusi said during the Senate panel yesterday.

“We’re waiting for positive resolution of that very long list,” Quinones said. “Obviously, [we will face issues] one at a time. This COA (issue) is right in front of us. We have to hurdle one, having a new fiscal regime that is not tax assumed will not make it worthwhile…There’s this water effluent, all of those need to be resolved.”