PNOC Exploration Corp., the upstream subsidiary of state-owned Philippine National Oil Company (PNOC), intends to invest approximately $182.3 million (PHP 8.4 billion) in the country's ageing Malampaya natural gas and other petroleum exploration projects this year, up 4.4 percent from 2015 approved budget of $174.5 million (PHP 8.039 billion), according to local media The Standard.
The company allocated $29.6 million (PHP 1.365 billion) in spending this year for the deepwater Malampaya gas project, which is located in SC 38 in the northwest Palawan offshore western Philippines where it has a 10 percent interest.
Royal Dutch Shell's local subsidiary Shell Philippines Exploration B.V. (SPEX) is the operator of the Malampaya field, which now supplies gas to three power plants in Luzon Island that have a combined electric generating capacity of 2,700 megawatts (MW) in the country's most populous region. Chevron Malampaya LLC is the other partner in the project, with gas production in the development forecast to deplete by 2024.
Revenue from Malamaya gas to power project provides the bulk of PNOC EC's revenue. Last year, the company's revenue fell 28.5 percent to $102.4 million (PHP 4.717 billion) in tandem with the decline in global oil prices, compared to a turnover of $143.2 million (PHP 6.6 billion) in 2014, The Standard reported Tuesday. PNOC EC's net profit fell to $30.9 million (PHP 1.426 billion) in 2015, down 41.4 percent from $52.7 million (PHP 2.43 billion) in the prior year.
PNOC EC is exploring ways of mitigating the impact of low oil prices on its operations. According to The Standard, these included "plans to increase international oil and gas trading by appointing trading partners to supply oil and petroleum products in countries that favor a government to government transaction." In addition, it is believed to be keen to partner BP plc to establish depot facilities in the country as well as form joint ventures with Nigeria, China, Oman and Russia to market their oil and gas products locally.
The Philippine upstream firm is also looking into the possibility of investing in small producing wells regionally in Indonesia. Such investments would extend PNOC EC's upstream oil and gas business beyond the country's borders as the firm is already an operator or a partner in 8 service contracts (SC) in the Philippines, covering an area of 22,251 square miles (57,630 square kilometers), including 6 offshore blocks -- SC 38, SC 47, SC 57, SC 58, SC 59, SC 63 and SC 75 -- and one onshore block at SC 37.
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