GMA opens Malampaya gas field

Batangas City — President Arroyo inaugurated yesterday the landmark Malampaya Deep Water Gas-to-Power project at the on-shore gas plant inside the Shell refinery in Barangay Tabangao here, hailing it as the start of the Philippines’ "independence from oil importation."

The project, the largest, single foreign investment in the history of the Philippines, is expected to provide government with some $13 billion in royalties over 20 years.

The ceremony included the opening of the valve of the 504-kilometer pipeline that fed fuel for the 1,000-megawatt power plant in Sta. Rita to mark the birth of the country’s natural gas industry.

"The inauguration of Malampaya that was primarily designed to make the first delivery of natural gas to the new Sta. Rita and Ilijan power plants signals the birth of the natural gas industry," the President said.

Full operation of the $4.8-billion government-private sector joint venture project took place three and a half years after its declaration of commerciality in May 1998.

The President was accompanied by Philip Watts, chairman of the committee of managing directors of the Royal Dutch/Shell Group of Companies. Also present at the ceremonies were Energy Secretary Vicente Perez and top officials of the National Power Corp. (Napocor), Philippine National Oil Co. (PNOC), Shell Philippines Exploration (SPEX), Texaco Phils. and the Manila Electric Co.

Speaking on behalf of the project’s investors and developer Shell Philippines Exploration BV, Watts said: "The project clearly demonstrates the commercial leadership, project management skills and technological innovation that Shell brings."

He said the project represents a significant proportion of the Philippines’ energy needs – some 25 percent needed for power generation and the corresponding reduction on imported supplies.

"I am also pleased to say the project has been designed and executed with full regard for its environmental and social impact, entirely in line with the Shell Group’s commitment to sustainable development," Watts said.

Mrs. Arroyo noted that already, Japanese, Malaysian and European companies have signified interest in putting up a consortium for a land-based gas pipeline to avail themselves of the rich natural gas deposits from Malampaya.

She said foreign companies are planning to build a pipeline network from Batangas to Manila and eventually to Bataan.

"To promote access to all, the secretary of the Department of Energy (DOE) will encourage interested parties to organize a consortium for the pipeline project," she said.

The President added that the operation of Malampaya was in line with the conversion of several Napocor plants into gas-fired facilities.

"This will provide a direct impact on consumers, with lower electricity rates and reduced future stranded costs under a competitive generation market," she said.

Mrs. Arroyo said Malampaya will reduce by some $700 million a year the country’s almost $3 billion in annual fuel importation.

"This will go very long way toward financing our plans and programs to the comfort of mass poverty and for our country’s modernization," she said.

Malampaya comprises the largest, single foreign investment in the history of the Philippines. It is a national flagship of the Philippine government under the DOE which expects to generate revenues of $8 billion to $10 billion over 20 years.

The project involves the extraction of natural gas from 3,000 meters below sea level in water depths of 820 meters. The gas is transported by two 30-kilometer flowlines to a shallow water production platform for separation of the condensate from the gas. The dry gas then flows for 504 kilometers by a subsea pipeline to an on-shore gas plant for final processing and delivery to three power stations with a total generating capacity of 2,700 megawatts.