Prime Infrastructure commits to expand Malampaya development

MANILA, Philippines — Razon-led Prime Infrastructure Capital Inc. has committed to expand gas production and possibly develop other nearby resources in the Malampaya field.

This was the basis of the Department of Energy (DOE) for approving Prime Infra’s acquisition of the Malampaya deep-water gas-to-power project.

In a briefing yesterday, DOE Secretary Raphael Lotilla said the government approved the sale of the 45-percent stake of Shell Philippines Exploration B.V. (SPEx) in the Malampaya gas-to-power project to Malampaya Energy XP Pte. Ltd. (MEXP), a subsidiary of Prime Infra, after a thorough review.

“The approval by the DOE of the sale of Shell ‘s interest in Service Contract (SC) 38 of Malampaya was premised also on the commitment of the new entrant to maximize the development of the existing resources in the Malampaya Camago reservoir with a view to developing the nearby fields as well,” Lotilla said.

“The new entrant is committed to maximize the utilization of the remaining natural gas in the Malampaya-Camago reservoir with a view to developing nearby gas fields,” he said.

The DOE cleared the sale last month after Prime Infra was found to be technically, financially and legally qualified to take over as new operator of Malampaya.

Under the deal, SPEx will remain as a subsidiary of Prime Infra, which will assume full ownership and control of SPEx once the process for safe and seamless turnover of operations is completed by Nov. 1.

Prime Infra has vowed to contribute by doing all that it can to produce as much gas as possible to sustain production in support of the power demand in Luzon.

Prior to the DOE approval, the sale of SPEx shares to Prime Infra had been approved by the Malampaya consortium and PNOC Exploration Corp.

“Prime Infra’s energy portfolio has always been aligned with the national government’s objective towards attaining energy independence and security, while reducing the country’s reliance on fossil fuels,” said Prime Infra president and CEO Guillaume Lucci said.

Lotilla said “this trend would continue as we reaffirm to prospective investors the openness of our economy to foreign and local investors and we assure them of the continued stability of our legal framework especially in the upstream oil and gas sector.”

He was referring to President Decree (PD) 87 or the Oil Exploration and Development Act of 1972.

Issued by Marcos’ father, PD 87 provides that the government is entitled to the equivalent of 60 percent of net proceeds from the sale of petroleum.

The Malampaya project is one of the country’s most important power assets, producing natural gas for power plants in Batangas City that provide up to 20 percent of Luzon’s total electricity needs. It started operations in 2001 with the consortium license for the project set to expire in 2024.