Malampaya to start drilling in May

There’s a big development which the business grapevine has been talking a lot about these days, and if all goes well – pun intended – it would surely be good for the country’s energy security.

I’m referring to Malampaya’s planned drilling of two to three new wells next year. The Enrique Razon-led Malampaya natural gas consortium is scheduled to start drilling the first of the three new wells in May and the second in June, industry sources told me.

The third may be drilled in November, if things go as planned.

This means that by 2026, the Malampaya consortium may start delivering new gas.

With the schedules now firmed up, this indeed is a huge development for the Philippines, putting the country in a better spot in terms of energy security. No wonder, businessmen are excited.

The consortium has already awarded the $180-million contract to Dutch firm Allseas which will put up the pipeline and umbilicals to connect the two new wells to the Malampaya platform in offshore Palawan.

It took some time because it takes time to prepare bids and get slots from drilling contractors, plus bids and contracts to connect these wells to the platform. A lot of planning and coordination with global contractors had to be done first.

But consortium members are quite optimistic.

There are strong indications that drilling these three wells will yield positive results, sources said.

Actually, even the previous consortium members were quite optimistic about the new wells, except they weren’t able to start drilling the wells because past administrations sat on their request for a contract extension, until some members got fed up, threw in the towel and sold their stake to Davao-based businessman and Duterte pal Dennis Uy.

That turned out to be controversial, however, until finally tycoon Enrique Razon made an offer and decided to take over.

The rest, as they say, is history.

Razon’s Prime Exploration Pte. Ltd., a subsidiary of Prime Infra, now leads the Malampaya consortium after acquiring MEXP Holding Pte. Ltd. from a subsidiary of Uy’s Udenna Corp.

“Prime Infra’s acquisition of MEXP reflects our shared commitment with the national government to help maintain energy security and independence as we transition to a renewable energy-fueled Philippine economy,” said Razon, Prime Infra chairman, at the time of the acquisition in 2022.

Malampaya, the country’s crown jewel, had a 25-year production contract, which expired in February 2024. The new consortium led by Razon was able to secure an extension for a final 15 years or until February 2039.

This should be enough time to help secure our energy needs while we transition to and explore affordable, stable and, possibly, cleaner sources of power.

It’s certainly a big bet for Razon, now the country’s richest man on an individual count, according to the Forbes list.

Razon has always been a risk-taker, anyway, expanding his port business even in conflict zones across the globe, unfazed by the hostilities as he always looked far ahead into the future. He was also the first to put up an integrated casino resort at the Entertainment City in Parañaque.

For the Malampaya investment though, we have to wait and see.

But sources said that there’s a huge possibility all three wells will yield positive results. And even if they get just one well running, that’s already a good deal, what more if they get all three.

Fingers crossed, Malampaya 2.0 will be successful. If it does, it would be a game-changer, especially with demand for power growing and with preference for green energy becoming more prevalent.

Natural gas, of course, is still a fossil fuel but let’s not kid ourselves – we are nowhere near achieving green energy sufficiency, if that’s even possible.

Natural gas, therefore, is an important transition fuel in the near-term, reducing the need for baseload fossil fuels like coal.

Hence, the Malampaya consortium – now an all Filipino consortium – has been accelerating investments on the Malampaya gas field to improve the output of existing wells and tap the new wells.

The Malampaya project is one of the country’s most important power assets, as it produces natural gas for power plants in Batangas City that account for around 20 percent of the Philippines’ total electricity requirements.

Marcos to Marcos

If Malampaya 2.0 happens, it would be a full circle of sorts for President Marcos because it was his father Ferdinand Marcos Sr. who actually laid the foundation for the development of indigenous petroleum resources, which in turn paved the way for the Malampaya deep water gas-to-power project.

Just the same, our government must continue preparing for the post-Malampaya scenario.

What happens after Malampaya? What happens when the wells dry up? What is the Marcos administration’s energy policy, moving forward?

The government must ensure that the country would be able to avert a power shortage amid our fragile power situation, which is aggravated by our aging coal-fired power plants.

For now, we will wait with bated breath for the results of the drillings, set to commence next year.

Hopefully, for the sake of energy security, there’s still enough burning magic down there, deep, deep below sea level.

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Email: [email protected]. Follow her on Twitter @eyesgonzales. Column archives at EyesWideOpen on FB.