DOE upholds decision to reject PXP Energy’s Malampaya takeover

MANILA, Philippines — The Department of Energy (DOE) has upheld its decision to deny the unsolicited proposal of Pangilinan-led PXP Energy Corp. to take over the Malampaya facilities after its contract expires in 2024.

The DOE-Energy Resource Development Bureau (ERDB) has maintained its position because PXP’s unsolicited proposal was over an area with an existing service contract.

“As to the reconsideration being sought by PXP on their unsolicited proposal for the strategic development and utilization of an Integrated Gas Hub (IGH) for Malampaya, DOE maintained its position that it cannot accept or entertain any proposal for an existing service contract,” it said.

The DOE is accepting proposals only under the Philippine Conventional Energy Contracting Program (PCECP) – which was launched in November 2018 – to help reinvigorate petroleum exploration and development activities in the Philippines.

This, as the agency is pushing to attain energy security, as well as cushion the country from the volatility of global oil price markets.

Under the PCECP, the DOE offered 14 pre-determined areas (PDAs), and the option for investors to propose their own exploration area, making oil and gas exploration a dynamic investment prospect for players in the energy sector. 

Meanwhile, three petroleum projects are recommended to get service contracts as part of reinvigorating the country’s oil and gas exploration sector.

The DOE-ERDB said there are five applications that are recommended to award for a Petroleum Service Contract (PSC).

However, two of the applications are currently under the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM).

“But due to the ongoing bilateral discussions with BARMM, two applications were put on hold,” the DOE-ERDB said.

BARMM replaced the Autonomous Region in Muslim Mindanao and is comprised of Maguindanao, Lanao del Sur, Basilan, Sulu, Tawi–Tawi, Marawi, Lamitan, Cotabato City and 63 barangays in six North Cotabato towns.

The DOE earlier said it would continue offering oil and gas prospects under the PCECP to help reinvigorate the country’s oil and gas exploration sector.

Presently, there are 23 active PSCs in the country.

Among all PSCs, the Malampaya Deep Water Gas-to-Power Project is the most successful. As the largest natural gas industrial project in the Philippines, it recovered all costs in four years.

The Malampaya gas project supplies fuel to around 40 percent of gas-fired plants in Luzon with over 3,000-megawatt in capacity.

While the contract will end in 2024, supply from the Malampaya gas field is projected to be depleted by early 2022 or latest by 2027.