Philippine President Ferdinand Marcos Jr renews Malampaya service contract until 2039

2023 May 15

RENEWAL. President Ferdinand R. Marcos Jr. signs the renewal agreement for the Malampaya Service Contract No. 38 on Monday (May 15, 2023) at the Malacañang Presidents Hall. The contract renewal, which was originally set to expire in February 2024, would allow the continued production of the Malampaya gas field for another 15 years until Feb. 22, 2039. 

MANILA – President Ferdinand Marcos Jr. on Monday signed the renewal agreement for the Malampaya Service Contract No. 38 (SC 38) that would allow the continued production of the Malampaya gas field for another 15 years until Feb. 22, 2039.

During the ceremonial signing at the Malacañang Palace, Marcos said the renewal of the contract, which was originally set to expire in 2024, is significant to achieve the country’s energy security as Malampaya powers 20 percent of Luzon’s energy needs.

“This is the key to our drive to energy security and calculated to advance the nation’s energy interest. This project will reduce our dependence on oil imports while ensuring a stable supply of energy,” Marcos said.

The 15-year extension for the Malampaya gas field concession, Marcos said, is consistent with the Constitution, and the state policy of hastening discovery and production of the country’s indigenous petroleum.

He reiterated the administration’s commitment to actively pursue the exploration, development, and utilization of the country’s indigenous energy resources, and to optimize the country’s energy mix.

“As we renew Service Contract (SC) 38, we optimistically look forward to the continued production and utilization of the remaining reserves of the Malampaya gas field, as well as further exploration and development of its untapped potential,” Marcos said.

The Malampaya Project will reduce the country’s dependence on oil imports and ensure a more stable supply of cleaner energy from an indigenous source.

Marcos urged the Department of Energy (DOE) to oversee the project’s implementation through strict monitoring and ensuring that the consortium’s goals are aligned with the country’s national interests.

DOE Secretary Raphael Lotilla welcomed the renewal of SC 38, adding that the department has “meticulously evaluated” the consortium.

Lotilla noted that the assessment encompassed legal, technical, and financial capabilities, and confirmed the consortium’s capacity to sustain the production operations and meet its obligations under the renewal agreement.

“The DOE recommended the renewal of the service contract, anchored on the commitment of the consortium to actively explore and evaluate additional gas resources,” Lotilla said.

“Through the stringent due diligence observed, the government aims to uphold responsible and sustainable energy practices while effectively managing the valuable resource that is the Malampaya gas field,” he added.

This policy was first laid down in 1972 through the landmark Presidential Decree No. 87 issued by the president’s father, former president Ferdinand E. Marcos Sr.

From the discovery of the gas field more than three decades ago, and the project’s commissioning in 2001, the Malampaya Deep Water Gas-to-Power Project has been a boon to the Philippines, providing 20 percent of Luzon’s energy requirement.

The Presidential Communications Office, in a news release, said through the project, the government was able to generate PHP374 billion in revenues.

In 2022 alone, the project yielded about PHP26 billion in government revenues.

Among the officials present during the event were House Speaker Martin Romualdez, Senator Raffy Tulfo, Executive Secretary Lucas Bersamin, Chief Presidential Legal Counsel Juan Ponce Enrile, Presidential Communications Secretary Cheloy Garafil, Defense Officer-in-Charge Undersecretary Carlito Galvez Jr., Prime Infra Chairperson Enrique Razon, and Philippine National Oil Company – Exploration Corporation President and CEO Franz Josef George Alvarez. 

Meanwhile, Speaker Romualdez welcomed the signing of the renewal agreement which could help avert business losses and ease people’s suffering from frequent brownouts.

“This is a welcome development as the Malampaya gas field provides a significant portion of our country’s energy requirement,” Romualdez said in a statement.

The new agreement would not only reduce the country’s dependence on imported oil for the power plants to run, but it would also help stabilize the price of electricity, Romualdez said.

“More importantly, it would help boost our power reserves and prevent brownouts resulting in losses for businesses and suffering for our people,” he added.

Filane Mikee Cervantes (PNA)