The Department of Energy (DoE) said on Tuesday it has not granted any extension for Service Contract No. 38 (SC 38) which is set to expire in 2024.
DoE, in a statement, said the application is still pending since 2008, when the SC 38 Consortium filed for a 15-year extension application.
It emphasized that the Luzon grid is very much dependent on the three power plants fueled by the Malampaya gas. The three power plants account for almost 40 percent of the power generation capacity of Luzon, equivalent to 2,700 MW.
“It is very important that Malampaya gas production remain at present levels, otherwise these power plants will shift to more expensive fuels,” it said.
In order to sustain the production levels of the project’s natural gas, the SC 38 consortium made additional investments in the form of Malampaya Phase 2 for completion in 2013 and Malampaya Phase 3 for completion in 2015.
The SC 38 consortium is led by Shell Philippines Exploration B.V., Chevron LCC and PNOC Exploration Corp.
Malampaya Phase 2 will install two additional subsea wells and tie manifold with minor modifications in the asset at a cost of US$ 250 million.
Malampaya Phase 3 will install compressors and self-installing platform at a cost of US$ 700 million.
Malampaya Phases 2 and 3 aim to prolong the same volume of gas production until 2024. Available data show that if no further activities are undertaken, gas production from Malampaya will drop starting 2015 and will run out by 2024.