Malampaya group taps Keppel for fabrication yard

MANILA, Philippines - The consortium for Service Contract (SC) 38 has jumpstarted its investment for the third phase of the Malampaya gas-to-power project.

The expansion will ensure continuous supply of natural gas for three key power plants in Luzon until 2024, government and company officials said.

In a statement, project operator Shell Philippines Exploration BV (SPEx) said the consortium awarded a fabrication yard contract to Keppel Subic Shipyard Inc.

“The yard will be located in Subic, Zambales and will fabricate, install and integrate the substructure and top side modules of the depletion compression platform to support the completion of Malampaya Phase 3,” SPEx said.

“This fabrication yard will not only generate local employment but is also expected to bring technical expertise into the country as it can serve as a possible site for future complex fabrication projects,” said SPEx managing director Sebastian Quiniones.

The project is estimated to generate at least 1,200 local jobs. Malampaya Phase 2 and 3 is expected to cost around $1 billion.

The SC 38 consortium is composed of SPEx and Chevron Malampaya LLC with a 45-percent stake each and state-led Philippine National Oil Co.-Exploration Corp. holding the remaining 10 percent.

“Malampaya Phase 3 aims to maintain the level of gas production to fulfil commitments under existing gas sales agreements thus ensuring the steady supply of natural gas to power the Luzon electricity grid,” SPEx said.

“Aside from ensuring security of gas supply until 2024, Malampaya Phase 2 and 3 avoids contractual penalties under the gas sales and purchase agreements,” Energy Undersecretary Jose Layug Jr. said in a text message.

The Malampaya project fuels the 1,000-megawatt (MW) Sta. Rita and 500-MW San Lorenzo power plants of First Gen Corp. and the 1,200-MW Ilijan natural gas power plant of SMC Global Power Holdings Corp., all in Batangas.

It currently supplies fuel for 40 to 45 percent of Luzon’s power generation requirements.

However, Layug said the Energy Department has yet to approve the consortium’s request for extension of the SC 38 license to 2039.

The license for SC 38 that allows the exploration of the Malampaya gas field in northwest Palawan will expire in 2024.

Early last month, operational glitches in the Malampaya project resulted in two hours of rotating brownouts in Luzon.