Government Expects P8 Billion in Malampaya Royalties in 2024

MANILA — The national government is projected to collect around PHP 8 billion in royalties from the aging Malampaya natural gas project this year, according to Surigao del Sur Rep. Johnny Pimentel.

Pimentel, a member of the House committee on public accounts, noted that this year’s expected royalties are significantly lower, down 55 percent from the PHP 17.7 billion collected in 2023.

“The sum is PHP 9.7 billion, or 55 percent less than the PHP 17.7 billion in Malampaya royalties that the government received in 2023,” Pimentel said in a statement on Sunday.

He expressed optimism that royalties from the 24-year-old offshore project will recover by 2026 or 2027 with the completion of two new deepwater production wells under Phase 4 of the Malampaya development.

“We are counting on government royalties from the 24-year-old gas project to gradually recover and increase – hopefully starting in 2026 or 2027 – after two new deepwater production wells are put in place under Phase 4,” Pimentel added.

According to the 2025 Budget of Expenditures and Sources of Financing (BESF) submitted to Congress, government royalties from Malampaya are expected to decrease further to PHP 5 billion in 2025.

Over the past decade, from 2014 to 2023, the government has collected a total of PHP 200 billion in royalties from Malampaya, averaging PHP 20 billion per year. These royalties are paid in exchange for the Malampaya consortium’s right to extract gas reserves from the field.

Pimentel stressed the broader significance of the project, noting that it is crucial for the country’s energy independence.

“Malampaya is not just about government royalties. It is, more importantly, about the country’s energy independence and security,” he said.

He emphasized the need for indigenous gas supplies to reduce reliance on imports and to shield the country from fluctuations in global fuel prices.

Malampaya has been a critical source of fuel for power plants in Luzon, powering a significant portion of the country’s energy grid. Pimentel praised Prime Energy Resources Development B.V., the operator of Malampaya, for its efforts to extend the life of the project by another 15 years through Phase 4.

Under Phase 4, Prime Energy will invest up to $600 million (PHP 35 billion) to drill two new production wells, which will be connected to the existing Malampaya platform. Drilling is scheduled for the second quarter of 2025, with new gas supplies expected by 2026.

The company has awarded a $69.9 million contract to London-based Noble Corp. to drill the wells, with the option of drilling a third exploratory well. Additionally, a $180 million contract was awarded to Dutch firm Allseas Nederland B.V. to install the subsea pipeline and umbilical infrastructure that will link the new wells to the platform.

Last week, the Department of Energy designated Malampaya Phase 4 as a project of “national significance,” fast-tracking regulatory approvals ahead of the scheduled drilling.

The Malampaya gas field, located 65 kilometers off the coast of Palawan, is operated by Prime Energy in partnership with UC38 LLC of the Udenna Group and state-run PNOC Exploration Corp.

With the expansion of Malampaya through Phase 4, the project is expected to play a critical role in meeting the country’s energy needs and boosting its energy security for years to come.