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PNOC-EC confident in continued viability of drilling in SC 38

THE Philippine National Oil Co.-Exploration Corp. (PNOC-EC) said the Malampaya field remains a viable resource for natural gas following the expiry and 15-year renewal of the field’s original service contract.

Candido M. Magsombol, a PNOC-EC vice-president with the company’s Management Services Division, told a Senate joint hearing that the company will continue its “active participation in SC (Service Contract) 38 Malampaya,” where the SC extension enables further well drilling to find and produce more gas.

“We believe that there is still gas there that we can still continue to produce,” Mr. Magsombol said.

PNOC-EC is a partner in SC 38, which has generated $12.4 billion for the government and $828 million for the company.

President Ferdinand R. Marcos, Jr. on Monday signed an agreement to renew the SC for Malampaya gas field in offshore Palawan running until 2039.

SC 38 was scheduled to expire on Feb. 22, 2024. Under the new agreement, the contract was extended to Feb. 22, 2039.

The Department of Energy (DoE) said on Tuesday that the Malampaya Consortium is expected to spend around $600 million on new drilling within SC 38.

The Malampaya Consortium is composed of Prime Energy Resources Development B.V., a subsidiary of Prime Infrastructure Capital, Inc. (Prime Infra), which has a 45% stake; UC38 LLC; and PNOC-EC, which own 45% and 10%, respectively.

The Malampaya gas field’s current well sites are expected to be commercially depleted by 2027. Mr. Magsombol said the PNOC-EC will “further explore other prospects outside the Malampaya prospect itself.”

Mr. Magsombol said PNOC-EC will work on the “drilling of Chico-1 Well and Workover of Mangosteen-1 Well in SC 37 in Cagayancillo, and the seismic data acquisition and processing in SC 57 in Calamian.”

“We (will) also coordinate with the Department of Energy on the award of new SCs,” he said.

It is also seeking to continue with its Mine 3 Coal Project, covered by COC (coal operating contract) 41, which is expected to produce coal in the second half of 2023. PNOC-EC will open another mine, Mine 4, within COC 41, which is expected to produce coal by the fourth quarter of 2024.

PNOC-EC has produced 757,000 metric tons from small scale coal mines within COC 41 since 2002, Mr. Magsombol said.

He added that PNOC-EC is looking at further exploration in COC 204 in Malangas, Zamboanga Sibugay.

“We just bored a hole there… we can call these explorator, just to check if there’s resources there.”

Mr. Magsombol told senators that PNOC-EC “is encountering challenges in pursuing exploration activities in the West Philippine Sea due to territorial issues.”

China claims more than 80% of the South China Sea, which is believed to contain substantial oil and gas deposits and through which billions of dollars in trade passes each year. A United Nations-backed arbitration court in July 2016 voided China’s claim to more than 80% of the sea based on a 1940s map.

China has ignored the ruling, which has failed to stop its island-building activities in areas also claimed by the Philippines, Vietnam, Brunei, Malaysia and Taiwan. — Beatriz Marie D. Cruz

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