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02-07-02
POWERING THE PHILIPPINES INTO THE NEW MILLENNIUM WITH MALAMPAYA NATURAL
GAS
DAVID J. GREER
SHELL PHILIPPINES EXPLORATION B.V.
1.

INTRODUCTION

In 1989, Occidental Philippines, Inc (Oxy) discovered gas in

the Camago-1 well in the area covered by Service Contract
No. 38 (SC-38), offshore Palawan in deep water and 500
km away from its potential market. The area was known to
be gas prone: Shell itself had been involved in two earlier
gas discoveries elsewhere in the block, which were then
considered uncommercial.

In 1990, Shell Philippines Exploration B.V. (SPEX) farmed-in taking a 50% interest and operatorship of
Block SC38 thereby providing the necessary deep water technology, financial strength and stamina to develop
this resource. As part of the farm-in deal, Shell drilled three wells, the second discovering the large
Malampaya gas field with its 400 to 600 metre gas column and 56 metre oil rim, connected to the Camago
structure. The promising discovery was further appraised by three additional wells. An integrated petroleum
engineering study was carried out using the latest proprietary 3-D carbonate reservoir modelling techniques
and incorporating the Pre-Stack Depth Migrated (PSDM) re-processed 3-D seismic data set. By 1995, it had
been demonstrated that Malampaya, with proven recoverable volumes of 2.5 Tscf gas and 85 MMstb
condensate, represented a significant opportunity for a commercial gas development for Shell and the
Philippines. These volumes were declared commercial in May 1998. Shell acquired 100% interest in SC-38
following the global Shell-Oxy asset swap executed on 15 th September 1998. Subsequently on 5th November
1999, Texaco Philippines Inc. farmed-in, to acquire a 45% working interest in SC-38. PNOC farmed-in to
acquire a 10% working interest on SC-38 on 22 nd December 1999.

2.

THE VISION
The Malampaya field, located some 80 km NW of the
Island of Palawan, is an elongated structure consisting of
two culminations separated by a saddle some 12.5 km
long with a width that varies between 1.5 and 3.5 km.
The reservoir is a high relief Oligocene to Early Miocene
carbonate build-up (Nido Formation) at a depth of some
3,000 metres subsea, developed over tight platform
carbonates of Late Eocene age. Two exploration wells
(Camago-1 and Malampaya-1) and three appraisal wells
(Malampaya-2, 3, and 4) delineated the field prior to
development, which has a maximum gas column of some
600 metres and proven reserves of 2.4 Tcf. The
expectation reserves are 3.2 Tcf, with a P15 of 4.1 Tcf.
The gas column is partly underlain by a 56 metres oil rim
with a STOIIP of 244 - 378 MMbbls.

Exploitation of the Malampaya is a recognised challenge

and Shells unrivalled experience in this arena enabled
the company to pursue the commercial development of
Malampaya. Initially, three development concepts were
evaluated. For the combined development of oil and gas,
a Tension Leg Platform (TLP) and a Floating Production
Storage and Off-loading (FPSO) facility were considered.
During the appraisal campaign, it became evident that
the oil development was marginal from an economic
perspective given the thickness of the oil rim. The FPSO
option was rejected on the grounds of the technical
complexity associated with the number of gas risers and the high pressures. A TLP option was also rejected in
favour of a less expensive capital cost alternative for the gas only development, comprising a deep water subsea
tieback to a shallow water platform, giving the most competitive landing price for the gas. Although the oil
rim is not part of the current development, every effort is being made to find an economic solution based upon
an independent oil development with combined gas export.
Aside from the technical, logistical and development cost challenges, the commercial challenge of developing
a gas market in the Philippines remained. The economics of developing such a remote deep water gas field
were always known to be marginal and therefore the venture needed to establish a market that could off-take
high volumes as soon as the gas would flow. Only the power sector could provide such a market. A study in
1994 confirmed that there would be a requirement around 2000-2002 for 3,000 MW of gas-fired power
generation at base load. At this throughput level, the gas could compete with alternative fuels, including its
main competitor, coal. Gas plants cost less and required less time to build and, using to combined cycle gas
turbine technology, have a higher efficiency than coal plants. The outcome of the study was endorsed by the
Philippines Department of Energy (DOE) who assumed responsibility for the promotion of a 3,000 MW market
for Malampaya gas.
The DOE allocated 1,500 MW to the National Power Corporation (NPC), a Government owned corporation
and the main power generator in the Philippines, and 1,500 MW to Meralco, the main distributor of electricity
in Metro Manila and the industrial growth area south of Metro Manila. NPC and Meralco, in turn, set out to
appoint independent power producers (IPP) who would build the power plants and supply electricity to them.
NPC, being a Government owned entity, proceeded under the Build-Operate-Transfer law, enacted to resolve
the power crisis that almost crippled the Philippines economy in the eighties. NPC awarded a competitively
tendered Energy Conversion Agreement to the successful IPP and, in early 1995, issued its invitation to tender
for a 1200 MW power plant to be constructed at Ilijan, Batangas (the Ilijan plant). NPC selected Korea Electric
Power Corporation (Kepco) to build and operate the Ilijan plant in December 1996.
Meralco, as a private company, did not need to follow the BOT route and could appoint an IPP of choice;
choosing First Gas Power Corporation (FGPC) a joint venture between the First Philippine Holdings
Corporation (60%), which is also involved in the management of Meralco, and British Gas (40%). FGH
incorporated two subsidiaries, one to build a 1,000 MW power plant at Santa Rita, Batangas, the other to build
the adjacent 500 MW San Lorenzo power plant.
By the beginning of 1995, the key players that would transform this gas to power project from a vision into
reality had been identified.

3.

THE UPSTREAM PROJECT

The upstream project development plan comprises nine subsea gas wells connected to subsea manifolds located
on the seabed over Malampaya, at a water depth of approximately 850 m. Five wells will be drilled initially to
ensure delivery of commissioning gas on 1 st October 2001 and first commercial gas sales on 1 st of January 2002
(gas for the commissioning of onshore power plants will be delivered 3 months prior to sales gas delivery to
buyers). Development drilling started in February 2000 and progress to date, based on a Drilling the Limit
schedule, has been excellent. The first group of five wells will be clustered around a subsea manifold located
between the Malampaya-1 and Malampaya-4 wells. The drilling of the subsequent four wells is planned for
2009 and may involve a second manifold near the Camago area. It is expected that two of these four wells
could be drilled from the initial northern manifold, while the two other wells maybe be tied back from a
southern manifold, targeting the Camago area of the accumulation. The plans for the number and phasing of
wells for the second phase of reservoir development will be subject to reservoir performance during early years
of production. The wells will be of a 7 mono-bore design with horizontal christmas trees, providing high
production capacities with a simplified design for long service life. The wells will have permanent downhole
gauges to accurately monitor reservoir performance and facilitate effective reservoir management.
The wells will be tied-back to the platform via two 30 km long 16 corrosion resistant alloy clad flowlines.
The platform and associated storage and loading facilities will be located on the NW Palawan Shelf, some 50
km west of Palawan Island and 400 km Southwest of Luzon Island in a water depth of 43 metres. Produced
water and condensate will be separated and treated on the platform. Condensate will be stabilised to meet
storage and transport requirements. The platform will have a Concrete Gravity Substructure (CGS) with
condensate storage in the base. Condensate will be exported via shuttle tankers, which will connect to a

30 km

504 km
Upstream

G a s d e h y d r a tio n
G a s d e w p o in tin g
C o n d e n s a t e s ta b i l i s a ti o n
E x p o r t c o m p re s s i o n

C a te n a r y A n c h o r e d
L e g M o o r in g (C A L M )
b u o y f o r ta n k e r
l o a d in g o f c o n d e n s a t e

Downstream
S u l p h u r R e c o v e ry
H 2 S re m o v al
M e te r in g
S u p p ly b a s e

B a ta n g a s

- 0 m

Pow er
S t a t io n s

A lt e r n a t iv e
Fuel
M a n il a

- 43 m
3 r d f lo w l i n e
(20 21 )
S u b s ea
m a n if o l d
- 82 0 m

C o n d e n s a te
s to r a g e

C o n d en sa te
ex p o rt

2 4" D ry g as
p i p e l in e

S an L o r e n z o
S a n t a R it a

T a b a n g a o R e fin e ry
B a ta n g a s
Ilija n (N P C )

2 x 16 C RA wet gas
M alam p aya
PLAT FORM

9 D e v e lo p m e n t w e l l s
1 C o n t in g e n c y w e l l

Draw. No. : P97-1541

Catenary Anchored Leg Mooring (CALM) offshore loading system, approximately every two weeks. Wet gas
will be de-hydrated and dew point controlled at the platform. Dry gas will be compressed and exported from
the facility via a 504 km long, 24" carbon steel gas export line to the onshore gas plant site at Tabangao,
Batangas on Luzon Island. There, the dry gas will be treated to buyers quality specifications in a purpose built
onshore processing plant.
Maintaining sufficient deliverability capacity from the field will require additional compression around the
year 2015 and installation of an additional 16 flowline from the subsea manifold to the platform in the year
2020 to reduce flowline back pressure and wellhead pressures. The last stage of development prior to
abandonment will consist of re-wheeling the compressors to accommodate lower suction pressure.
The project is following a tight schedule to meet the 1 st of October 2001 first gas commitment to the gas
buyers. With almost 85% of the project already completed, SPEX is focussed on completing the remaining

workscope. Full consideration continues to be given at all times to the six project tenets of cost containment,
schedule attainment, use of innovative technology, high system availability, exemplary HSES (Health, Safety,
Environment and Security) management, and Sustainable Development.
4.

THE TECHNICAL CHALLENGES

Malampaya will deliver gas for the generation of some 3,000 MW of electrical power for which it will be the
only source of gas. As such the total Malampaya production facilities from the deep subsea wells to onshore
gas plant will require high system availability. The principal technical challenge is to ensure continuous
delivery of sales specification gas throughout the production chain whilst containing costs and maintaining
HSES standards.
4.1 Subsea
The wet gas subsea tieback of Malampaya requires the use of the latest modelling and flow assurance
strategies. With seabed temperatures as low as 5 C, hydrates could easily form in the flowlines and pipelines.
Hydrate formation will be inhibited using of methanol injection at the individual wells. In the event of a
hydrate blockage, the dual flowline configuration will allow for round trip pigging to clear the lines and
provide the flexibility to produce through one line whilst blowing down the pressure in the blocked line to melt
the hydrate plug.

Due to Malampayas high system availability requirements, the subsea system must perform to the highest
standards of reliability to ensure that gas supply requirements are achieved. Confidence in attaining the
required reliability for the subsea system has resulted from detailed availability analysis and modelling, the
planned use of standard, field-proven equipment designs, proper material selection, the highest levels of
quality assurance, equipment testing and verification. In addition, emphasis has been placed on ensuring that
the experience and lessons learned from other subsea systems has been incorporated into the design of the
Malampaya subsea system.
The 820 metre water depth at the location of the Malampaya manifold and the remoteness of the location from
other oil-field infrastructure and resources presented unique challenges during the installation phase for the
subsea system. Emphasis was placed on careful planning of installation tasks and preparation of contingency
plans and procedures. In addition, a full integration test of the subsea system was undertaken on land prior to
installation of the system offshore. This test was used to verify that the system operated correctly and to train
and familiarise personnel who will be involved in the installation and operation of the system.
4.2 Platform
Liquid surges could be expected at the platform
as a result of ramping-up gas production
following a period of low production rates. This
would normally require the use of a slug catcher
and / or over-sizing of the liquids handling
vessels.
The Malampaya project has used
process modelling and high integrity, fast
response inlet control valves and control systems

in conjunction with availability modelling to demonstrate that sufficiently slow ramp-up rates can be achieved.
This eliminated the surge protection requirements, whilst maintaining the reliability of supply to the buyers.
Thus a major reduction in facilities weight was achieved, with a resultant reduction in the cost of the topsides.
A state of the art dynamic model of the complete production system from wells to buyers is being developed to
aid control of operations during these transient conditions.
Availability of supply is crucial to the project. A detailed availability model of the Malampaya production
system from reservoir to delivery has been instrumental in analysing the weak points in the chain and arriving
at the best sparing philosophy for achieving high availability. The availability requirements have been
translated into the procurement packages of all the major items of equipment. The most important of which
was for the onshore gas plant, as any shutdowns in these facilities will have an immediate impact on supply to
buyers. The offshore facilities, unlike those onshore, will have the benefit of the long gas export pipeline being
operated at high pressure which can then be de-pressurised to compensate for any short duration disruption in
the topsides process.
The topsides of the Malampaya platform were fabricated in Singapore and will weigh over 13,000 tonnes when
in operation. A single lift of the 11,500 tonne (dry weight) integrated deck has never been attempted in South
East Asian waters. Mobilisation costs of suitable heavy lift vessels from either the Gulf of Mexico or the North
Sea would be prohibitively expensive and the Project Team therefore opted for a single float-over installation.
The topsides were raised some 20 metres and loaded out onto a barge in readiness for transportation to the
Malampaya site in March 2001. The topsides facilities (measuring 40 x 92m in plan) were then set on their
concrete base as a complete integrated deck in the South China Sea, on schedule at 16:17 hrs on 17 th March
2001.
At an installation weight of 11,500 tonnes, the Malampaya topsides is the largest integrated deck ever installed
in Asia Pacific and is currently the largest offshore topsides installation in the world using the float-over
method. This method allowed a complete integrated deck to be installed as single unit, thereby maximising the
onshore completion of fabrication and testing work. Its supporting base, the Malampaya Concrete Gravity
Structure, which was built in Subic, had already been installed three months ahead of schedule on
2nd June 2000.
The platform operating philosophy is to have minimum personnel working offshore. This strategy will reduce
risks associated with personnel travelling to and from the offshore platform. To complement this strategy, the
platform processes will be controlled from a continuously manned onshore control room. This in itself is not
new, however, the vast amount of electronic data that will be transferred from the platform to the onshore
control room will be via satellite, requiring high integrity systems and the latest telecommunications
technology. The platform control system will rely on field bus technology, where the amount of cabling on the
platform is substantially reduced as a consequence of using high speed glass fibre data lines.
4.3 Pipelines
The field flowline and gas export pipeline route selection, design and installation are at the forefront of deep
water pipeline technology. The pipelines traverse structurally complex terrain with varied seabed
characteristics and sea bottom relief. The figure below illustrates a compressed cross-section of the route
illustrating the varied relief, from the subsea manifold to the landing site at Batangas.
0
CGS Location

Batangas

South of Mindoro

100

W ater d ep th (m )

100
200
300
400
500

Manila Trench

600
700

100

200

300

KP position (km)

400

500
5

The Philippine archipelago is recognised as being one of the most seismically active areas in the world. The
gas export pipeline crosses active faults, an extensive system of submarine channels and areas susceptible to
mass gravity flows and other soil instabilities. In addition, the pipeline route was selected to avoid
environmentally sensitive areas such as coral reefs and pearl farms.
The pipeline route was surveyed in several
extensive offshore campaigns to gather
geophysical, geotechnical, environmental and
metocean design data.
Advanced satellite
technology and computer visualisation tools
allowed the Project Team to make rapid and
informed routing selections and decisions. An
environmental consultant was involved at an
early stage to ensure all potential environmental
concerns were identified, eliminated or mitigated.
A new generation of dynamically positioned laybarge was employed for the pipeline installation
to place the pipe precisely along the seabed route
whilst minimising any disturbance to the seabed.
A specialist group, working as part of the
pipelines design team, systematically addressed
seismic hazards within a limit state design framework. A seismic hazard analysis was commissioned to
provide seismic design criteria such as fault locations, displacements and ground movements. A separate mass
gravity flow study investigated the likely pipeline loading as a consequence of submarine gravity slides. Finite
element models of soil behaviour and pipeline response were developed to validate the design.
4.4

Onshore Gas Plant

Geochemical studies and zonal mapping of the

H2S in the Malampaya reservoir have determined
that concentrations could vary across the field
between zero and a maximum of 1,000 ppm for
an individual well but the produced gas to the
platform is not expected to exceed 500 ppm. The
smooth, continuous, operation of the onshore gas
plant over a wide range of flow rates and variable
H2S concentrations means that the process design
will be determined as much by operational and
availability criteria as capital cost. The plant
configuration and sparing philosophy should
provide the required high on-stream availability.
The challenge in detailed design, procurement
and construction will be to realise this high
availability target through the quality of the
engineering and striving for a low-intervention
design and turnarounds.
In order to provide a facility that is designed for long-term availability and high reliability, it is critical that the
Contractors involved in the work share this goal. Incentive performance-based contracting strategies are being
used and co-operative alliancing promoted to realise these goals.
5.

THE COMMERCIAL CHALLENGES

At the outset, it was recognised that the Malampaya Deep Water Gas to Power project could only succeed if the
upstream project was fully integrated with the three downstream power projects. This meant aligning the
interests of the Government (involved in both the upstream and through NPC in one of the key downstream
projects); SPEX in the upstream; NPC, the Lopez Group and British Gas in the downstream, and
synchronising investment decisions of about $US 4.5 billion in total. The DOE, in view of its involvement in
several aspects of te project, declined an active role in the negotiating process. It did, however, organise a
forum for all relevant departments and Government agencies through which it would oversee progress and
support the project as required.

The upstreams viability depends entirely on the realisation of the power projects. By contrast, the power
project developers were less dependent on the upstream as their plants would be dual-fired, i.e. they could run
on liquid fuel and gas; furthermore, their combined purchasing power could support a LNG importation
scheme. In favour of the upstream option was the fact that the development of the indigenous resources of
Malampaya best served the national interest.
SPEX marketed the gas on the basis that its price would have to underpin the upstream economics. At the
same time would have to be competitive with coal-fired power generation, on a total cost basis, and cheaper
than LNG, taking into account the price of LNG, its shipping cost and the cost of storage and re-gasification in
the Philippines. The gas price adjustment formula furthermore links the gas price to oil price fluctuations, thus
providing a measure of competitiveness with oil based power plant fuels.
The Ilijan and Santa Rita GSPAs were signed in December 1997 and January 1998 respectively, after lengthy
negotiations, having overcome an impasse in 1996 during which Shell considered downstream involvement.
The San Lorenzo GSPA followed shortly thereafter and was signed in April 1998.
In view of the limited time between final agreement of the GSPAs in May 1998 and the planned first gas to
platform in June 2001, a contracting strategy was adopted that incorporated the six project tenets described
earlier. Separate contracts were placed for the five main upstream project components: pipeline fabrication,
coating and installation; platform construction and installation management; subsea engineering detailed
design, fabrication and procurement, drilling rig rental for development drilling and the onshore gas plant
detailed design and construction. Project components with a precise definition of scope and well identified
risks, such as pipelines, were awarded as lump sum contracts. Areas such as the gas production platform,
onshore gas plant and subsea facilities in which significant challenges remained in respect of technological
innovation, meeting availability and schedule targets, were awarded under reimbursable contracts. These
contracts were structured using a combination of traditional reimbursable payments combined with risk reward
mechanisms, with system availability and life cycle costs taking precedence over capital cost.
6.

ENVIRONMENTAL COMPLIANCE

The gas export pipeline route passes through an environmentally fragile region that includes coral reefs as well
as commercial fishing grounds, pearl farms, tourist areas, sites of archaeological interest and ancestral
domains. To obtain project approval called for a highly responsible approach and SPEX committed itself from
the very start of the project to minimise environmental and social impact and involve key stakeholders in
addressing issues of concern.
Shell commissioned detailed, independent, environmental baseline studies to assess potential impacts and
recommend measures for their mitigation. These included use of state-of-the-art under water survey
techniques to map and assess coral cover and bio-diversity. An inventory of fauna living in the corals was
made, as well as marine surveys of the mangroves and sea grasses. In addition, detailed socio-economic and
cultural studies of the area were conducted.
Key stakeholders were consulted at various stages. Initially, scoping workshops were held to introduce the
project and identify issues and concerns. Following the environmental assessment, validation workshops were
held to share the results of the studies and to explain and discuss the mitigation measures on the identified
impacts. Participants included local governmental agencies, NGOs and representatives of indigenous
communities.
To encourage wide participation in the consultation process with the key stakeholders and raise awareness,
booklets, posters and video, were used in addition to public hearings and workshops. The work of the SPEX
team was helped by the well-established and highly respected Pilipinas Shell Foundation, Inc. which has been
working with local communities since 1982. Communities have been assured that the Foundation will receive
funds from the project to enlarge the scope of its continuing activities, which include training farmers and
young people.
7.

SUSTAINABLE DEVELOPMENT

In addition to complying with the law and fulfilling all obligations and conditions associated with approved
Environmental Compliance Certificates, SPEX is committed to promoting Sustainable Development
throughout all project activities. SPEXs commitment to this is articulated in the Companys Business
Principles, HSE Policy and Commitment, the Shell Report, as well as in SPEX Business Plans.

Sustainable Development is about balance and integration, i.e., integrating the economic, social and
environmental aspects of everything SPEX does and balancing short-term wants with long-term needs.
Sustainable Development applies to everyday choices SPEX makes in implementing Malampaya project
decisions.
SPEX aspires to be a leader in the economic, environmental and social aspects of everything it does; first
choice for shareholders, customers, and employees, those with whom the Company does business, society and
future generations. SPEX believes that its commitment to Sustainable Development holds the key to long-term
business success. The values that underpin Sustainable Development are embodied in SPEXs business
principles that provide the foundation for everything SPEX is and does.
Through Sustainable Development, SPEX integrates the economic, environmental and societal aspects of
business to achieve sustained financial success, safeguard the environment and develop the companys
reputation as partner and provider of first choice for all stakeholders.
8.

MALAMPAYA: A KEY LINK IN ANY FUTURE TRANS-ASEAN GRID

Linking the Philippines to the proposed Trans-ASEAN Gas Pipeline (TAGP) may not be as far-fetched as
currently projected by some. The Malampaya field facilities are strategically located to serve as a link to the
TAGP. They are very close to Sabah in Malaysia, with estimated reserves of 6 - 8 Tcf, which have currently no
immediate market.
Additional gas demand prospects in the Philippines beyond the Malampaya Deep Water Gas to Power project
appear to be positive, as alternatives for energy diversification and increasing self-reliance remain limited.
Moreover, the recent increases and inherent instability of crude oil prices enhance the economics of gas
substitution. Governments must exert every effort to sustain or even enhance such interests by providing a
more favourable environment that will encourage further gas exploration, reduce regulatory risks for long-term
investments and enhance the competitiveness of gas compared to other fuels. The recent ASEAN Council on
Petroleum (ASCOPE) forum on Trans-ASEAN Gas Pipelines provided a venue for discussion among all the
relevant regional players and highlighted the opportunities for gas trading, both by pipeline and LNG.
Shell has participated in the development of a reliable Interconnected European Gas Network, which has been
in operation over the last 30 years. Shell has thus been instrumental in developing the European gas market;
Europe now intends to focus not only on the security of supply, but also on cost-efficiency through increased
competition in the energy sector. This policy led to the recently adopted Gas Directive, which sets phased
targets for the opening of each member countrys gas market. Up to now, the cost-efficiency incentive for the
European gas industry was provided by the competition between gas and other fuels. The Gas Directive will
create a new challenge for the gas industry, which has to keep on developing the capacity and reliability of the
European gas network within the new regulatory framework of gas-to-gas competition.
As ASEANs gas industry continues to evolve, and developments such as Malampaya provide a foundation for
possible links with ASEAN neighbours, some lessons may be drawn from the European experience which may
have some relevance for the ASEAN gas industry. Despite the diversity of the EU member states, European
gas companies have been able to develop a large gas market, characterised by a high level of security of supply.
An integrated European gas grid has developed by a step-by-step "bottom-up" approach, with each stage
corresponding to new sources of supply and development of new markets. At each stage, Governments have
set the framework to ensure that the necessary infrastructure would be developed on a commercially and
financially robust basis.
If creation of the Trans-ASEAN grid follows this approach, then the timing of each link will depend on
decisions made by the large number of players involved and, as such, the rate of development is difficult to
predict. In the short term, LNG may provide a more flexible approach to meeting the gas demand and security
of supply needs of the Philippines. For the longer term, however, it is clear that the Malampaya facilities will
open the gateway to implementing and integrating the Philippine leg of a Trans-ASEAN pipeline.
9.

TRANSFORMING THE VISION INTO REALITY

This landmark project is now nearing completion on target. It represents the largest industrial undertaking in
Philippines history with a combined investment of $US 4.5 billion ($US 2 billion in the upstream). Over the
life of the project, it is estimated that the Philippines Government will receive some $US 10 billion in revenue
whilst saving a similar amount in foreign exchange transactions. Malampaya marks the birth of the
Philippines gas industry, paving the way for cleaner and more efficient power generation in the new
millennium.

The Malampaya Project is a live example of climate-friendly technology transfer. The gas supplied from
Malampaya will mainly replace oil-fired power generation, with oils share in power generation reducing from
47% to 9% based on DOE forecasts. This will significantly reduce greenhouse gas emissions in the
Philippines mainly because the lower carbon intensity of gas compared to oil.
The project, with the majority of the contracts nearing completion, is moving along its trailblazing path, with
good co-operation between Government and private enterprise and a determined focus by the downstream and
upstream sectors to surmount the remaining challenges. The globally distributed SPEX Project Team with its
can do, must do, will do spirit is fully committed to Sustainable Development and environmental compliance
as well as delivering a fit for life development to power the Philippines into the next Millennium with
Malampaya natural gas. It also provides a springboard for future growth in the Philippines gas market and
provides infrastructure to serve as a link in any future Trans-ASEAN grid.
SPEX will strive to help to build a better Philippines in which current and future generations enjoy greater
economic, social and environmental security by embracing the concept of Sustainable Development in all
Malampaya business decisions. In this way SPEX will continue to create value for shareholders and society,
while remaining responsive to societys ever changing expectations.