The Netherlands and UK based Royal Dutch Shell has announced plans to pump $1 billion to $1.2-billion of new investment into Phase 2 of the Malampaya deep water gas-to-power project.
The investment plan, which will also in time require a injection from Shell’s partners, the American firm Chevron Corporation and the state-run Philippine National Oil Company (PNOC), was announced by Simon P. Henry, chief financial officer of the multinational oil giant.
The equity sharing arrangement of the consortium members in Shell Philippines Exploration B.V (SPEX) would be 45 % each for Shell and Chevron; and 10 % for PNOC.
The overall plan is to extract enough additional gas from the Malampaya field to power a new 300 MW power facility for around 25 years.
Part of the capital outlay would also be for refurbishment works on existing wells to ensure gas supply reliability for the three existing gas sale purchase agreements, the supply from which is currently fuelling 2.7 GW of capacity for the Luzon grid. An advantage of the plan is that there is no need for new drilling. What is being done is a refurbishment of the existing well to ensure reliability of gas supply for the three committed GSPAs, whcih have to be supplied for 24 to 25 years.
The Shell-led consortium first invested $1.2 billion for the upstream component of the Malampaya venture in the 1990s. For the downstream side, which included the power plants of First Gas group and Korea Electric Power Corporation, total investments were around $3.3 billion.