(Bloomberg) – The Philippines has discovered a new natural gas source for the first time in over a decade, extending the life of its depleting gas field as the nation seeks to cut its dependence on coal.
The Malampaya offshore gas platform, located off Palawan in the Philippines, has supplied roughly one-fifth of the country’s electricity needs for more than two decades. A new discovery at the nearby Malampaya East-1 well is expected to help extend the life of the mature gas field.
The discovered reservoir in Malampaya East-1, near the existing Malampaya gas field, is estimated to contain around 98 billion cubic feet of gas, equivalent to almost 14 billion kilowatt hours of electricity per year, President Ferdinand Marcos Jr. said in a video message on Monday.
“This helps Malampaya’s contribution and strengthens our domestic gas supply for many years to come,” Marcos said. Initial testing showed that the well flowed at 60 million cubic feet per day, indicating it has the potential to produce more and confirming it’s a rich resource comparable to the original Malampaya wells, he added.
The latest gas find could help the Southeast Asian nation reduce its dependence on coal but it will need to continue importing liquefied natural gas to meet its growing energy needs.
Yet it pales in comparison with the massive gas assets in neighboring Indonesia and Malaysia, which are in the trillions of cubic feet. Malaysia’s state-owned gas company produces 7 billion cubic feet per day, while Indonesia’s oil firm has output at 2.8 billion cubic feet per day.
Shares in Philippine energy firms climbed following the announcement. PXP Energy Corp. surged as much as 20.8% while Oriental Petroleum rose as much as 8.3% and First Gen Corp., which sources gas from Malampaya, jumped by up to 10.2%.
The discovery could help secure long-term gas supply and eventually benefit companies like First Gen and San Miguel Corp., said Luis Limlingan, head of sales at Regina Capital Development Corp. in Manila. “But any real impact may take time as infrastructure and development need to catch up,” he said.
Malampaya has supplied around a fifth of the Philippines’ energy requirements, but production has dwindled after more than two decades in operation, prompting the nation to start importing gas in 2023.
In 2024, the Philippines imported nearly half of its natural gas requirements, Marcos said in October. In January last year, Marcos signed a law to establish a downstream natural gas industry and increase the fuel’s share in the Philippines’ energy mix.
A Philippine group led by billionaire Enrique Razon last year started drilling for new natural gas reserves near the Malampaya field off Palawan province that’s facing the South China Sea.
Marcos said apart from the gas, the discovery also includes condensate, a liquid fuel. “This additional resource can help support the government’s efforts for the stabilization of our power supply,” the president said.
The latest discovery represents the first milestone under the fourth phase of drilling in Malampaya which includes two other wells, Marcos said.
Top image provided by Prime Energy
