Government share from Malampaya to reach $10 billion by mid-2018

MANILA, Philippines — The Philippine government’s share from the Malampaya deepwater gas-to-power project is expected to reach $10 billion by mid-2018.

 “We’re just estimating that the projection is around June, July—I don’t have the exact date—that the 60 percent share of govt will hit $10 billion,” Shell Philippines Exploration B.V. (SPEX) managing director Don Paulino said.

The amount represents royalties from the time the Malampaya project started production in 2001 to date.

Paulino said this is four years ahead of earlier projections made by SPEX, a local unit of energy giant Royal Dutch Shell which leads the Malampaya consortium.

The Malampaya consortium is composed of SPEX, Chevron Malampaya LLC and PNOC Exploration Corp. Service Contract 38, which covers the Malampaya gas field offshore Palawan will expire in 2024.

In 2016, government revenues reached P416.77 billion, or roughly $8 billion.

Part of the Malampaya royalties is collected by the Department of Energy (DOE) to form part of the energy-resource development fund, commonly known as the Malampaya fund, which is then remitted to the Bureau of the Treasury (BTr)

Since the start of the Duterte administration, DOE Secretary Alfonso Cusi has been pushing for the option to tap Malampaya funds to pay for the stranded costs and debts of the National Power Corp. (Napocor), instead of passing on the burden to consumers.

More recently, the Energy chief is considering to use the Malampaya fund to purchase seismic survey vessels to move the country’s oil and gas sector forward, which is more in line with the original goal of the fund.

Under the Electric Power Industry Reform Act of 2001 (EPIRA), the Malampaya fund is reserved for energy resource development and exploitation activities.

The proposal to use the Malampaya fund to buy seismic survey vessels was pitched by a team composed of the DOE, the Department of Finance (DOF) and national security offices.

Sen. Sherwin Gatchalian supported the proposal, noting that each vessel would cost P1.2 billion but there would still be enough money to cover the payment for Napocor’s stranded contract costs and stranded debts.