Shell Says Malampaya Investment as high as $400 Million

Shell Philippines Exploration estimates expenditures for developing the Malampaya reserves offshore Palawan to cost between $300 - $400 million. Shell Philippines Exploration's managing director Jeremy Cliff, said that extended well tests on the Malampaya-10 well are currently underway to determine the commerciality of the oil rim offshore Palawan Island.

"We have to talk to partners and the government. It's going to be a very tough job to come up with a commercial proposition. It will also depend on the shareholders' willingness to put money (into the project)," he said. "Our difficulty right now is that the well itself was drilled in the best part of the field so we don't know (what the yield will be for the other parts)," he said. Spex's Malampaya partners includes Chevron Texaco and state-owned Philippine National Oil Co.

Cliff said the range of reserves for the oil rim could lie somewhere between 30 million and 40 million barrels. There are not any firm drilling plans for the Malampaya site next year.

Malampaya gas is now generating 2,700 mw of power but only around 1,000 to 1,400 mw is being utilized by existing power plants, including the Lopez group's 1,000-mw Santa Rita plant and 500-mw San Lorenzo plant.