President Marcos Approves Renewal of Malampaya Contract

Following President Ferdinand R. Marcos, Jr.’s approval of the renewal of Service Contract No. 38 (“SC 38”), the Malampaya Deep Water Gas to Power Project is moving full speed ahead for new exploration and development. The renewal extends SC 38, which governs the Malampaya project, for fifteen (15) years, until February 22, 2039. 

The renewal agreement was signed by President Ferdinand R. Marcos Jr., and representatives of the SC 38 consortium: Donnabel Kuizon Cruz, Managing Director and General Manager of Prime Energy Resources Development B.V. (“Prime Energy”); Sebastian C.Quinones, Jr, Senior Adviser and member of the Prime Energy Board; Belinda C. Racela, President of UC38 LLC (“UC38”); and Franz Josef George E. Alvarez, President and CEO of PNOC Exploration Corporation (“PNOC EC”). Energy Secretary Raphael P.M. Lotilla signed the agreement as witness.

“This is a significant development for our national energy security and independence. The Malampaya asset will continue what it has started in operating this world-class installation for further exploration and ultilization of the country’s remaining gas reserves, as well as open up the other potential near field areas for future production,” said Enrique K. Razon Jr., Chairman of Prime Infrastructure Capital, Inc. (Prime Infra).

Ms. Cruz, Managing Director and General Manager of Prime Energy, thanked the President and the DOE: “On behalf of the SC 38 consortium, we are very grateful for the renewal and for the opportunity to continue to operate and develop the Malampaya asset and facilities. Once again, we commit to doing our very best to help ensure a stable, cleaner and dependable energy supply for the Philippines.”

The Malampaya Project presently supplies natural gas to power four (4) power generation plants in Batangas (Santa Rita, San Lorenzo, San Gabriel, and Avion) with a combined capacity of 2,011 megawatts. The major components of the Malampaya Project include subsea wells and flowlines, a shallow water platform to process natural gas, a depletion compression platform, a catenary anchored leg mooring buoy (CALM buoy) for the export of liquid condensate, a 504-kilometer long gas export pipeline on the seabed, and an onshore gas plant in Batangas City.

Under SC 38, the consortium has been remitting 60% of the net proceeds from Petroleum Operations to the Government. During the period from October 2001 to December 2022, the consortium has remitted more than US$ 13.14 Billion.