Malampaya Gas Prices to Stay Competitive Against Imported LNG Amid Extension Talks

The Philippine Department of Energy (DOE) is actively engaged in discussions with the Malampaya consortium to ensure the stability of indigenous gas prices, as part of the newly negotiated gas sale and purchase agreements (GSPAs) linked to the 15-year extension of service contract 38. Energy Secretary Raphael Lotilla recently emphasized that the existing pricing formula, which has effectively shielded Filipino consumers for two decades, is not slated for change in the proposed agreements.

According to Secretary Lotilla, the cost of gas from the Malampaya project remains notably lower than that of imported liquefied natural gas (LNG), a factor he describes as a “gift” to the Filipino populace. This price advantage is seen as a strategic cushion against fluctuations in power prices, prompting the government to advocate for continued natural gas exploration in the region.

Energy Undersecretary Alessandro Sales is spearheading these crucial discussions with the Malampaya consortium and market leaders. The goal is to craft GSPAs that will span the duration of the extended 15-year service contract for the Malampaya gas field.

The urgency of these negotiations is underscored by the impending expiration of the first 25-year Malampaya contract in February, along with the current GSPAs for the gas field’s output. The new GSPAs are intended to encompass not only the remaining reserves in the existing field but also any potential deposits that could be tapped from new wells near the current site.

Secretary Lotilla also revealed that plans by Prime Energy and other stakeholders in the Malampaya project, including a new round of seismic surveys and the drilling of at least two new wells, are proceeding as planned. He expressed confidence in the ongoing drilling program and noted that the finalization of the new GSPAs would act as a catalyst for fresh investments into the project.

With these developments in motion, there is an optimistic outlook that gas from the new wells could begin flowing as early as 2026, marking a significant milestone in the country’s pursuit of energy independence and economic stability.