Shell-Led Malampaya Project Consortium Increases Philippine Investment

The consortium behind the Philippines' Malampaya natural gas project will invest an extra $1 billion to ensure reliable supply, the chief financial officer of Royal Dutch Shell said on Tuesday.

Shell Philippines Exploration, a unit of the oil major, is the operator of the Malampaya project with a 45% interest.

Chevron Malampaya, a unit of the U.S. energy firm, also has a 45% share, and the Philippines' state-owned PNOC Exploration Corp has 10%.

"This year we intend to make investments for the second phase of Malampaya," Simon Henry, chief financial officer of Royal Dutch Shell, said adding the $1 billion would be invested over five years.

The Malampaya operators supply gas to power-plant operators First Gas Power Corp, a unit of First Gen Corp, and San Miguel Energy Corp, a unit of conglomerate San Miguel Corp.

Currently, the project can supply enough gas to generate up 2,700 megawatts of power per day, the project's website shows.

Jose Layug, undersecretary at the Department of Energy, said the Malampaya operators planned to increase gas sales by enough to generate an additional 300 megawatts.

"It looks like they are more certain now that they can sell more gas from the Malampaya," Layug told reporters after Henry's speech to a business forum in Manila.

Layug said the consortium had spent about $1.2 billion to implement the first phase of the project between 2002 and 2006.

"The second phase is to ensure the reliability and continuous supply of the entire Malampaya project. They need to refurbish and bring in all the equipment needed to maintain the platform," Layug said.

The consortium has committed to supply gas to power producers for a period of more than 20 years, he said.