in photo (Top left clockwise): Department of Energy, Undersecretary Felix William “Wimpy” Fuentebella; Lt. Gen. Rozzano D Briguez (Ret) President & CEO, PNOC Exploration Corporation (PNOC-EC); Mr. Lars Wittig, ECCP Vice President, Mr. Gerry Constantino, ECCP Director,Ms. Amor Maclang, ECCP Innovations Committee Chair, and Mr. Florian Gottein, ECCP Executive Director
By Alithea De Jesus
As the quest for sustainable and indigenous energy for the Philippines continue, the Malampaya Deepwater Gas-to-Power Project (Malampaya) sees the continued natural decline of gas reservoir pressure and experts warn of an impending energy crisis, the Department of Energy (DOE) and the Philippine National Oil Company – Exploration Corporation (PNOC-EC) are urging the country’s judiciary to push for the expansion of indigenous energy explorations to secure the country’s future energy supply. The recent virtual forum organized by the Joint Foreign Chambers of the Philippines likewise discussed the role of natural gas in the country’s energy sector and the Malampaya gas field as the best model case study for a successful Public-Private Partnership (PPP).
Legal bottlenecks
While there is a wealth of opportunities that can be explored in the country, both the DOE and the PNOC-EC clamored for the immediate resolutions by the Supreme Court (SC) of legal challenges pertaining to the expansion of upstream explorations to find the next gas field that can equal Malampaya’s contribution to the nation.
According to DOE Undersecretary Atty. Felix William B. Fuentebella, “We have to re-emphasize that everything goes together: legal, executive, and judicial. We are pushing for the expansion of exploration areas. We are making it more attractive to investors. At the end of the day, the judiciary will be the judge.”
This was echoed by PNOC-EC President Lt. Gen. Rozzano Briguez who said, “There are challenges regarding the legal processes that we have. We are looking at a very good prospect. What is preventing us are legal aspects with our laws and regulations.”
Under the leadership of Shell Philippines Exploration B.V. (SPEX), the longest-running energy company in the Philippines, Malampaya continues to power up to 20% of the country’s electricity for 20 years now. It has generated over USD 12 billion worth of revenues remitted directly to the Philippine government, making it one of the country’s most successful PPPs. Its forecast depletion by the year 2024, however, requires that the discovery and development of new energy sources must be performed as soon as possible.
Investor reluctance to perform exploration activities may be due to the pending case of the Malampaya consortium with the SC for the income taxes questioned by the Commission on Audit (COA).
Indigenous energy explorations
The DOE has the mandate to explore more energy options for the country for more indigenous energy resources as well as imported ones like liquefied natural gas (LNG). It can nominate areas for exploration within the country’s jurisdiction subject to the legislative body’s approval.
Usec. Atty. Fuentebella said, “We have to tell the judiciary that exploration is also important. The Constitution tells us to explore and develop our own indigenous sources. We need to utilize all our resources as well. The way forward is to develop all options.”
Meanwhile, Lt. Gen. Briguez emphasized the importance of drilling and developing our own indigenous resources, stating that drilling would allow us to discover the richness of our country’s natural resources and amplify our data collection.
Citing the success of other ASEAN neighbors in terms of upstream explorations, Lt. Gen. Briguez pointed out, “While we are waiting for the depletion of Malampaya, Malaysia has already discovered seven times more just by drilling. The most important is to make the investment climate to make the operational data enticing. We need a good grasp of prospectivity so that investors will know.”
Malampaya as the model ‘PPP’
Lt. Gen. Briguez remarked that Malampaya has always been “cited as a model for shaping the future share of natural gas in the country’s energy mix and pioneered the country’s natural gas industry. The Malampaya was responsible for providing a clean new power source to meet the rapidly increasing demand for electricity.”
He also recognized the significance of Malampaya as one of the largest single industrial projects in the history of the Philippines, with investments amounting to billions of dollars. During the webinar, the Department of Finance underscored the importance of PPPs in relation to the country’s overall economic growth, while the DOE emphasized its commitment to continue working with the private sector in advancing clean energy transition and providing sustainable energy in the country. The PNOC-EC also laid out its similar goals towards energy security, equity, sustainability, and independence.
Malampaya has become a model for best practices in PPPs through the collaboration between the government and the private sector and has shown the way for the government and the public sector to work together for a clean energy scenario. Usec. Atty. Fuentebella stressed, “It’s really a long-term process, but we believe the DOE has planted the seeds. We have provided a good legacy for the future administration.”