Senator urges Malampaya auction post-2024


Sen. Sherwin Gatchalian said that the government should put up the Malampaya gas-to-power project for auction once its Service Contract (SC) 38 expires in 2024.

Speaking at a webinar organized by the Management Association of the Philippines on Tuesday, Gatchalian emphasized that bidding the asset would be the only way for the public to get the best price and the best operator possible. He particularly believes that the bidding must be conducted, whether the government wishes to get a new operator or keep the existing one by then.

Udenna Group’s Malampaya Energy XP is set to take over as Malampaya’s operator from Shell Philippines Exploration B.V. (SPEX) pending approval from the Department of Energy (DOE). The Dennis Uy-led firm announced that it bought Shell’s 45% stake in SC38 back in May, which the Gatchalian-chaired Senate Committee on Energy is probing.

The senator further said that Malampaya would “revert” to the government upon SC38’s expiration, which also means that the public would be entitled to the gas field’s earnings. 

Under SC38’s terms, 70% of the gross proceeds from the sale of natural gas would go to the contractor to recover the investment cost. The remaining 30%, meanwhile, is shared by the government and the consortium on a 60-40 basis, respectively. Apart from SPEX, another Udenna unit — UC38 LLC — owns the other 45% of the Malampaya consortium after purchasing it from Chevron last year, while PNOC-Exploration Corporation owns the remaining ten percent on behalf of the government.

Malampaya, the country’s only major source of indigenous natural gas, is said to run out of supply between 2022 and 2027.

On another note, Gatchalian said that there are potential oil and gas deposits in the West Philippine Sea (WPS) which can cover the country’s energy demands.

Citing data from the DOE, he said that the WPS has some 6,048 million barrels of oil, which is equivalent to 36 years of demand. Meanwhile, a total of 7,108 billion cubic feet of gas can be obtained from the WPS, potentially accounting for 96 years of demand.