Press Release
October 14, 2020

Gatchalian seeks inquiry into depleting supply of Malampaya gas field

Senator Win Gatchalian has called for a Senate inquiry on the issues surrounding the looming expiration of Service Contract (SC) 38 or the Malampaya Deep Water Gas-To-Power Project given its critical role in the country's energy security.

Gatchalian, along with Senate President Vicente C. Sotto III and Senator Panfilo Lacson, filed Senate Resolution No. 533 citing the need for Congress to be apprised of the government's plans for SC 38, in the wake of the reported depleting supply of natural gas that is being drawn from the Malampaya gas field.

The surrounding areas of Malampaya is said to be vastly rich in oil and natural gas and exploring it at this point could prepare for oil production by the time its gas supply is depleted, the senator said.

Gatchalian also wants to look into the compliance of the government and the consortium with Presidential Decree No. (PD) 87 or the Oil Exploration and Development Act of 1972, and the impending sale of the 45% stake of Shell Exploration B.V. (SPEX) which is also crucial since SPEX is the operator of the platform.

Aside from the 10% stake of the Philippine National Oil Corporation-Exploration in Malampaya, the 45% stake, previously held by Chevron, is now under Udenna Corporation's subsidiary, UC Malampaya Philippines.

"We're looking at the larger picture which is the energy security of the country. So we have to make sure that whoever takes over that portion of Shell should have the technical capability. They should be able to demonstrate that they can operate this rig competently with technical expertise and in the future, if ever that area has potential, they should be able to demonstrate that so they can explore and develop that area," Gatchalian said.

Gatchalian cited Section 4 of PD 87 which states that the government may directly explore for and produce indigenous petroleum and may also indirectly undertake the same service contracts, provided that the contractor is technically competent and financially capable to undertake the operations.

Located approximately 50 kilometers northwest of Palawan, Malampaya is the country's main domestic source of energy fuelling five power plants as it accounts for 20.08% of power generation in the entire country and 29.3% of power generation in Luzon.

It has likewise provided the government a total revenue of Php 261,681,610,752.59 from January 2002 to December 31, 2019 which is a crucial source of funding for various energy resource development programs and initiatives.

Given its declining output, one of the issues facing Malampaya includes whether or not it should be extended or the government should opt to manage and operate it, according to Gatchalian.

"This is not plain and simple business transaction. It affects all of us because of energy security issues. We want to be assured that we will not run out of fuel supply in the immediate future," Gatchalian ended.

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