Philippines To Sign $1.5 Billion Malampaya Gas Project Expansion Deal

Energy Secretary Rene Almendras said Friday that the government is set to sign deal to expand production capacity at the Malampaya natural gas project offshore the central Philippines.

The expansion will entail an additional investment of $1.5 billion by the consortium that operates the gas field, Almendras told reporters.

The expansion comprises a new platform at an estimated cost of $1 billion that has facilities to inject pressure into the gas reservoir to boost ouptut and a horizontal drill at a cost of $500 million to determine the extent of reserves at the nearby Camago oil field.

The consortium is led by Shell Philippines Exploration and Chevron Philippines, which each own a 45% stake in the Malampaya project. State-owned PNOC Exploration Corp. (PEC.PH) owns the remaining 10%.

The consortium has the right to operate the project until 2026. Almendras said the agreement may be extended in consideration of the new investments.

The Malampaya field contains an estimated 2.7 trillion cubic feet of natural gas and 85 million barrels of condensate--gasoil, naphtha, and other relatively light hydrocarbons--some 3,000 meters below sea level, according to the consortium's website.

-By Cris Larano and Rhea Sandique-Carlos, Dow Jones Newswires; 632-848-5051; [e-mail]