By Myrna M. Velasco
State-run Philippine National Oil Co.-Exploration (PNOC-EC) will likely take a key role in any government’s decision to extend Service Contract (SC) 38, or the license governing the development and operation of the Malampaya gas field project.
Energy Undersecretary Donato D. Marcos indicated that he will be engaging PNOC-EC on inputs relating to possible extension of the Malampaya field’s commercial life – but it is not certain yet if it will be given to the same set of contractors or if it shall be more prudent for government to change the course of the extended license’s award.
“We will sit down with PNOC-EC and we will come up with feasible financial, technical and legal parameters on how to handle Malampaya’s license extension,” he said. The energy official pointed out that major consideration would be an arrangement that shall be more beneficial to the Philippine government – primarily in terms of revenue share.
The Malampaya contract will lapse in 2024, and prior to reckoning date, the field contractor led by Shell Philippines Exploration B.V. (SPEX) already filed with the Department of Energy (DOE) its application for a 10-year license extension.
It remains a puzzle what scale the facility could still yield as additional gas supply – since both government and the Malampaya contractor had not been transparent enough on survey analysis or reserve data relating to the field.
There had been reports of prospective gas yield until 2027 but for leaner megawatt-capacities of power projects. Even that though may already require updated study. On mode of license extension, it had been previously proposed that PNOC-EC be warranted an equity hike of up to 33.3-percent; must already be equal to the shareholdings held by SPEX and Chevron Malampaya LLC.
PNOC-EC is currently the minority partner with just 10-percent share in the gas field project.
With higher stake in the project, it was opined that PNOC-EC “can better protect the interest of the Philippine government,” because it can already exercise ‘swing vote’ in business decisions.
An option being set on the table also is for PNOC-EC to corner substantial shareholdings of 49-percent in the project, and will offer the majority equity of 51-percent to a strategic partner that could provide the technical expertise in manning the field’s operations.
It has been noted that with PNOC-EC holding minority interest, “the operations will not be subject to stringent government regulations, thus, ensuring smooth and efficient operations of the project.”
The propounded 49-percent equity take for PNOC-EC is also aligned with the joint venture deal policy that the National Economic and Development Authority has set forth for government-run firms.