Philippines’ Energy Landscape
The Philippines remains heavily dependent on imported fuels to meet its energy needs, a reality that continues to strain the country’s energy security and economic stability. As of 2024, fossil fuels made up 79% of the nation’s electricity generation, with coal accounting for 63%—83% of which was imported, mainly from Indonesia. Over half of the country’s total primary energy supply is imported, as confirmed by DOE Secretary Raphael Lotilla. The steady expansion of LNG import terminals—two operational and four more under construction—reflects this reliance, as dwindling domestic gas supplies are being replaced by costlier, volatile imports. This high dependency leaves the country vulnerable to global fuel price shocks, as previously seen during the 2022 to 2023 energy crunch.
Simultaneously, electricity demand is rising rapidly. The Department of Energy projects that the country’s power demand will more than triple by 2040, reaching 54,655 MW—a 5% average annual growth. This surging demand underscores the urgent need for stable and affordable energy, not just for industrial growth but also for consumer welfare. Business groups like the Makati Business Club emphasize the importance of balancing energy affordability with climate action. The DOE’s push for “least-cost” energy options and its ongoing rural electrification efforts—targeting the remaining 6% of unelectrified households—aim to both uplift communities and generate long-term economic returns, with a projected ₱400 billion in national economic gains.
The country’s energy crisis has been further aggravated by the steady decline of its only major indigenous energy source: the Malampaya gas field. From powering up to 40% of Luzon’s electricity demand at its peak, Malampaya’s current output stands at just 1.2 to 1.3 GW, or roughly 10 to 20% of Luzon’s power needs. Without intervention, the gas field was expected to be depleted by the late 2020s. This looming shortfall prompted the renewal of Service Contract 38 until 2039, allowing further exploration, including Phase 4 drilling. In the meantime, the country’s fallback on imported LNG has exposed consumers to volatile electricity pricing, as evidenced during the 2022–2023 spike in global LNG costs, which forced power producers to seek rate hikes.
Discovered in 1989 and brought into commercial production in 2002, Malampaya has long been the backbone of the Philippines’ energy security. It remains the only commercial indigenous source of natural gas in the country, making its decline particularly concerning. Recognizing this, the government passed the Philippine Natural Gas Industry Development Act (RA 12120) in early 2025, prioritizing the use of locally sourced natural gas over imported LNG. The DOE continues to view Malampaya as a strategic asset not only for its supply potential but also as a cleaner alternative to coal and fuel oil, supporting the country’s transition toward a more sustainable energy mix.
Natural gas from Malampaya is also vital from an environmental standpoint. When burned, it emits far fewer greenhouse gases than coal or oil, making it a critical “transition fuel” in the country’s pathway to cleaner energy. At full capacity, Malampaya displaces an estimated 1.35 million kilograms of CO₂ per hour compared to coal-based generation. In 2023, natural gas accounted for 22% of the national power mix—an essential bridge in the shift from fossil-heavy energy toward renewable sources. While renewables remain a long-term goal, the immediate challenge remains ensuring uninterrupted, affordable, and cleaner power supply—and Malampaya continues to be at the heart of that equation.
The Malampaya Deep Water Gas-to-Power Project: Phases and Decline
The Malampaya Deep Water Gas-to-Power Project remains a cornerstone of the Philippines’ energy infrastructure, though its original promise is now challenged by declining reserves. Initially developed as a multi-billion-dollar joint venture between Shell, Chevron, and PNOC-EC, the project is now operated by Prime Energy Resources Development B.V., a unit of Enrique Razon Jr.’s Prime Infra. It partners with UC38 LLC (formerly part of Udenna Corp.) and retains a 10% stake held by the state-owned Philippine National Oil Company – Exploration Corporation. Prime Energy has reaffirmed its commitment to drill new deepwater wells and begin delivering commercial gas from Phase 4 by 2026, signaling a renewed push for energy self-sufficiency.
Malampaya’s infrastructure remains one of the most advanced in the country: gas is extracted from an offshore platform, funneled through a 504-kilometer subsea pipeline, and processed at an onshore gas plant in Batangas City. This gas has powered major Batangas-based plants, including Sta. Rita, San Lorenzo, Ilijan, San Gabriel, and Avion, with a combined capacity of around 3,200 MW. However, dwindling reserves have reduced Malampaya’s actual output. As of May 2025, it supplies only 1.2 to 1.3 gigawatts (GW) to the Luzon grid—down sharply from its peak when it fueled up to 40% of Luzon’s electricity. The Department of Energy aims to raise this output to as much as 1.7 GW with the completion of Phase 4.
The urgency behind this expansion stems from Malampaya’s natural decline. Projections indicate that gas production could drop from 2.13 billion cubic meters in 2024 to just 0.94 bcm by 2033—a 56% decrease. Without new drilling, estimates once warned of complete depletion by 2027 or even earlier. Recognizing this, the government renewed Service Contract 38 (SC 38) until 2039, allowing room for further exploration and development, including the ongoing MP4 initiative. If no substantial domestic replacement is found, the shortfall will increasingly be met by imported LNG—exposing the country to volatile global prices and threatening energy security and affordability.
Earlier efforts to extend the field’s life include Malampaya Phases 2 and 3. MP2, completed in 2013, involved drilling two new production wells, while MP3, completed in 2015, featured the construction of the first fully Philippine-built offshore Depletion Compression Platform. These upgrades were designed to stabilize production rates by maintaining reservoir pressure. While they successfully prolonged Malampaya’s output, they couldn’t reverse its overall decline—necessitating the high-stakes Phase 4. Without its success, the country may face rising electricity prices and power supply instability, both of which disproportionately affect ordinary Filipino households and businesses already burdened by global market fluctuations.
The Noble Drillship and Malampaya Phase 4 (MP4)
The arrival of the Noble Viking—a 7th generation drillship—on June 19, 2025, at the Bagong Pag-Asa drill site offshore Palawan marked a major milestone in the Philippines’ energy history. This event officially launched Malampaya Phase 4 (MP4), the next chapter in revitalizing the country’s only indigenous natural gas source. Department of Energy (DOE) officials described the occasion as not just a technical undertaking, but a symbol of national resolve to secure energy independence. “This moment reflects a renewed national commitment to securing the Philippines’ long-term energy security,” said DOE Officer-in-Charge Sharon S. Garin, emphasizing both the public-private partnership and its broader significance to Filipino consumers and industries.
Malampaya Phase 4 involves drilling three new wells—Camago-3, Malampaya East-1, and Bagong Pag-asa-1—with the goal of extending the life of the aging gas field beyond its projected depletion window. Camago-3 and Malampaya East-1 are development wells designed to connect with existing infrastructure on the Malampaya Shallow Water Platform. In contrast, Bagong Pag-asa-1 is an exploration well situated 15 kilometers away, tasked with uncovering potential new reserves of gas or oil. Prime Energy Resources Development, led by tycoon Enrique Razon Jr., is spearheading the operation under Service Contract 38. The company has partnered with global players such as Noble Corporation, OneSubsea, and Allseas for key components like the drillship, subsea production systems, and offshore pipelaying.
The Department of Energy has confirmed that first gas from these wells is expected by the fourth quarter of 2026. To accelerate the process, the Malampaya Phase 4 project was designated as an “Energy Project of National Significance” (EPNS) in October 2024, allowing for fast-tracked permitting and demonstrating the government’s prioritization of the endeavor. The timely success of MP4 is critical not just for maintaining the Luzon grid’s reliability but also for reducing reliance on expensive, imported LNG, which exposes the country to global price swings and supply chain risks.
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At the core of this initiative is the Noble Viking itself—one of the most advanced offshore drilling vessels in the world. As a 7th generation drillship, it is equipped to operate in water depths up to 12,000 feet and drill as deep as 40,000 feet. It boasts a high-specification blowout preventer (BOP) system rated at 15,000 psi and features cutting-edge control technologies. These capabilities make it especially suited for deepwater, high-pressure environments like those found in the Malampaya concession. This level of sophistication reflects the sheer technical demands and risks involved in offshore gas extraction.
The Malampaya Phase 4 campaign is not just a test of engineering—it is a high-stakes national effort that requires intense coordination, specialized expertise, and state-of-the-art equipment. Offshore operations will involve the installation of approximately 17 kilometers of corrosion-resistant alloy (CRA) flowlines, six pipeline end terminations, 45 kilometers of umbilicals, and over 20 flying leads, in addition to complex subsea jumpers. These components, sourced and installed through contractors like Allseas and supported by Prime Energy’s global partners, highlight the enormous logistical and technological effort underway. As DOE OIC Garin noted, “Offshore drilling is a high-risk, highly technical endeavor… yet your dedication and resilience bring this mission to life.” With MP4 now in motion, the Philippines takes a bold step toward energy resilience, technological advancement, and securing power for generations to come.
Benefits and Implications of MP4 for the Philippines
Malampaya Phase 4 (MP4) represents a pivotal development for the Philippines’ energy security. As the only commercial source of indigenous natural gas, Malampaya plays a critical role in reducing the nation’s dependence on imported fuels such as coal and Liquefied Natural Gas (LNG). With volatile global fuel prices and the Philippines’ historical vulnerability to supply disruptions, the extension of Malampaya’s lifespan through MP4 directly enhances national resilience. According to the Department of Energy (DOE), the project could boost output to 1.5 to 1.7 gigawatts (GW) for the Luzon grid, mitigating the need for expensive imports and cushioning consumers and industries against future price shocks. As DOE OIC Sharon Garin affirmed, MP4 “strengthens energy security and supports both jobs and consumers.”
Beyond stability, MP4 is a major economic catalyst. The project generates both direct and indirect employment across sectors—from rig workers and engineers to local service providers in Palawan and Batangas. While the exact job numbers for MP4 are still emerging, earlier Malampaya phases, like the Philippine-built Depletion Compression Platform, set precedents for strong local participation. MP4 also ensures the continuation of massive government revenues from Malampaya, which has already delivered over USD $13.8 billion to public coffers since 2001. These funds are vital for infrastructure, social services, and national development. Moreover, the technical demands of the drilling campaign—
featuring the 7th generation Noble Viking drillship and advanced subsea systems—provide opportunities for Filipino professionals to acquire cutting-edge skills and benefit from technology transfer.
Environmentally, MP4 supports the Philippines’ transition to a cleaner energy future. Natural gas emits significantly less CO₂, sulfur dioxide, and nitrogen oxides compared to coal, making it a strategic “bridge fuel” as the country ramps up its renewable energy targets—35% by 2030 and 50% by 2040. The Marcos administration views gas as essential to maintaining grid stability while solar and wind capacity scale up. As Prime Energy’s CEO Donna Kuizon Cruz noted, “Indigenous natural gas is the cleanest, most climate-resilient fossil fuel for power generation.” In this context, MP4 helps strike a balance between immediate power needs and long-term climate goals.
However, offshore drilling is not without risk. MP4 takes place in the West Philippine Sea, a biodiversity hotspot where environmental incidents could have serious ecological consequences. Gas flaring, methane leakage, and potential oil spills are real threats associated with such operations. DOE officials, including OIC Sharon Garin, have acknowledged the high-risk nature of deepwater drilling, emphasizing the need for technical excellence and safety. Environmental groups remain vocal about the dangers, citing reports like “Offshore, Off-Limits” (CIEL, 2025), which highlight the long-term impacts of marine drilling on fragile ecosystems.
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To address these concerns, MP4 has undergone a rigorous Environmental Impact Assessment (EIA), a mandatory step in securing operational permits. The recent Philippine Natural Gas Industry Development Act (RA 12120), signed in January 2025, further empowers the Department of Environment and Natural Resources (DENR) to enforce stricter emissions and safety standards. Prime Energy, the project operator, is expected to maintain adherence to international environmental and safety protocols, following the legacy of previous operator Shell. The advanced control systems and monitoring technologies integrated into Malampaya’s infrastructure are designed precisely to prevent accidents, minimize emissions, and protect marine habitats—making MP4 not just a symbol of energy independence, but also of responsible stewardship
