Luzon facing future power crisis, solon warns

Surigao del Sur Rep. Johnny Pimentel has warned that the Philippines could face a potential power crisis toward the end of the next president’s term, as China appears to be “holding hostage” the development of the world-class offshore Sampaguita gas discovery.

“The Malampaya deep-water gas field is projected to run dry by 2027, and without fresh reserves from Sampaguita, Luzon’s power supply could be threatened,” Pimentel, chairperson of the House strategic intelligence committee, said in a statement on Sunday.

“The rest of the country is also worried about the prospect of a Luzon power shortage. We are anxious that if Luzon sneezes, Mindanao and the Visayas might catch a cold,” Pimentel said.

Located 65 kilometers northwest of Palawan, Malampaya has been supplying enough gas to cover at least 20 percent of Luzon’s electricity demand for 21 years.

Sampaguita has been dubbed as the country’s next Malampaya. The undeveloped hydrocarbon field below the seabed is located 250 kilometers southwest of Malampaya.

“Sampaguita is estimated to contain anywhere from 3.5 to 4.6 trillion cubic feet (tcf) of gas. This is comparable to if not bigger than Malampaya’s 3.4 tcf of gas upon discovery,” Pimentel pointed out.

In a worst-case scenario, Pimentel said the country might be able to bring in liquefied natural gas (LNG) from abroad to replace Malampaya’s dwindling reserves.

“However, the cost of building the new LNG infrastructure and importing the gas implies that consumers in Luzon may have to pay a higher generation price for the electricity,” Pimentel warned.

Apparently due to Chinese intimidation, the Department of Energy (DOE) last month ordered the private operators of petroleum Service Contracts 72 and 75 “to put on hold any exploration activities” in the West Philippine Sea.

The Sampaguita field is within SC 72, or the Recto Bank basin concession.

In a notice to the private operators, DOE Undersecretary Donato Marcos said: “The Security, Justice, and Peace Coordinating Cluster (SJPCC), taking into consideration the political, diplomatic, and national security implications of any activity in the West Philippine Sea, has agreed that prior approval of the said cluster is required as condition precedent to any activities (in the West Philippine Sea).”

“There’s no other way to put it. Our energy security is being held hostage by China, even though the two petroleum service contracts cover areas well within our exclusive economic zone,” Pimentel said.

Forum Energy Ltd., a subsidiary of publicly listed PXP Energy Corp., operates SC 72. PXP itself operates SC 75.

In response to the DOE notice, the two operators have invoked a force majeure.

“The force majeure means the cancellation of drilling activities in Sampaguita scheduled this year,” Pimentel said.

Prior to the latest force majeure, the DOE had given Forum Energy until October 16, 2022 to drill its two commitment wells in Sampaguita at a cost of $100 million (P5.2 billion).