As announced on 11 March 2020, Chevron has finalized a deal with UC Malampaya Philippines Pte Ltd (a wholly-owned subsidiary of Udenna Corp.) to sell its participating interest of 45% shares in SC 38, located in Northwest Palawan Basin. Signed on 25 October 2019, this deal is part of Chevron's global divestment effort amounting to USD 23 billion through 2023.    SC 38 contains the deepwater Malampaya field, the sole gas and condensate producer in the Philippines. The field supplies gas to the Santa Rita, San Lorenzo and Iligan power plants operated by Kepco and First Gas Power Corp, to generate a total of 2,700 MW per day, which account for over 40% of the power demand of Luzon island.    Prior to the divestment, right holders of SC 38 were Shell (45%, operator), Chevron (45%) and PNOC-EC (10%).    Incorporated in 2002, Udenna Corp. was founded in Davao city and is primarily involved in petroleum, shipping, real estate and telecommunications industries. The independent company holds 51.4% interests in Phoenix Petroleum which is engaged in trading refined petroleum products and lubricants, operation of oil depots and storage facilities and allied services. In 2007, Phoenix expanded its portfolio by acquiring the Batangas Union Industrial Park and Calaca terminal in Luzon with capacity of 50 million liters.     Previously in February 2018, PNOC-EC expressed interest to acquire an increased stake in the Malampaya project. The state-owned company and the Department of Energy (DOE) had also conducted a feasibility study on Malampaya field extension when the service contract expires in 2024.    In late 2018, Shell submitted a request to extend SC 38, in order to operate the Malampaya field beyond 2024.    Background Information    The SC 38 was initially awarded to Occidental on 23 February 1989. Within the same year, Occidental discovered Camago field which flowed around 33 MMscfg/d and 730 bc/d. Shell farmed-in in June 1990. In 1992, Shell drilled the Malampaya 1 discovery which flowed around 38 MMcfg/d and 14 Mbbl/d. A declaration of commerciality for the field was signed in 1998. The 10-year exploration contract phase expired on 22 February 1999 with all work commitments fulfilled.    The field came onstream in September 2001 at an initial rate of 87 MMcf/d. The 2P recoverable reserves for the field are estimated at 3.5 Tcfg, 123 MMbc and 30 MMbo from the Lower Miocene Nido Formation.    The Phase 1 of the Malampaya-Camago project reportedly saw an investment of USD 1.2 billion. A development drilling program on the field, worth USD 135 million, was completed in 2000. The first of the five deviated development wells (each costing USD 20-30 million), Malampaya 5 (MA-5), was spudded on 15 February 2000 and was drilled to a final TD of 3,800 m. The main gas reservoir in the well was cased-off as a future gas producer. A pilot hole from Malampaya 5 confirmed the existence of a 50-55 m oil leg below the gas column and appeared to have resolved the ambiguity regarding the field's gas-oil and oil-water contacts. The oil is described as light crude, similar to Nido.    Phase 2 development consisted of the drilling of two infill wells, Malampaya 11 and Malampaya 12, between March and July 2013. The wells, with an estimated cost of USD 250 million, added up to production from the five wells drilled in Phase 1. The field have cumulatively produced approximately 1.9 Tcfg, 75 MMbc and 1.9 MMbo in 2018.    Shell managed to mitigate the field production decline since 2015, utilizing a new offshore platform, the Depletion Compression Platform (DCP). The Phase 3 development was conducted to maintain field production levels and meet gas sale commitments until the end of the current production license in 2024. The eastern side of the field still has an upside potential of medium size gas accumulation, which is believed to be holding approximately 100 Bcf.
Philippines (Northwest Palawan B.) Malampaya