President Ferdinand Marcos Jr. signed the service contract (SC) renewal agreement on Monday, which allows the Malampaya gas-to-power project consortium to function for another 15 years.

The renewal agreement alleviates concerns about a power crisis caused by the deal's original expiration in 2024 and the predicted depletion of reserves in the field in offshore northwest Palawan by 2027.

Covering 830 square kilometers, the Malampaya gas field has been supplying natural gas to four power plants, such as Santa Rita, San Lorenzo, San Gabriel, and Avion, located in Batangas province, generating a fifth of the country’s electricity needs.

With the renewed service contracts, it extends the 25-year production contract that was originally set to expire on February 22 next year until 2039.

As early as 2010, the Malampaya Consortium had applied for a contract renewal, repeatedly warning that output from the field was getting depleted.

Aside from producing gas, the consortium is required to develop a work plan that includes geological and geophysical studies as well as the drilling of at least two deepwater wells from 2024 to 2029 in order to unlock the potential of the existing gas field and adjacent areas and supplement Malampaya's dwindling output.

Marcos estimated that Malampaya would generate P26 billion in government income in 2022 alone.

He showed trust in the SC 38 consortium's abilities and competency to handle the project, adding, "You have committed yourself to a firm work program, geared toward developing resources both in existing and nearby gas fields to provide incremental production."

Shell Philippines Exploration was the first to be given the contract to develop the Malampaya gas resource in 1990.

It sold its 45 percent ownership and the right to run the project to Enrique Razon Jr.'s Prime Infrastructure Capital Inc. in 2022.

Dennis Uy's Davao-based Udenna Corp. owns another 45 percent of the company, which it purchased from Chevron in 2020 for $565 million, and the state-owned PNOC Exploration Corp. (PNOC-EC) owns the remaining 10%.

Meanwhile, Energy Secretary Raphael Lotilla praised the renewal of SC 38, saying it provided "some certainty in our indigenous gas supply."

Razon, Prime Infra's head, hailed the breakthrough as critical to the country's energy security and independence.