Future West PHL Sea gas bonanza should be invested in sovereign wealth fund – lawmaker

Photo Courtesy of GMANetwork

A senior member of Congress wants all future national government royalties from forthcoming offshore natural gas projects in the West Philippine Sea to be put in the Maharlika Investment Fund (MIF) – the proposed state-sponsored social wealth savings meant to accumulate for the enjoyment of future generations of Filipinos.

“We would highly recommend that all potential government earnings from prospective undersea gas development projects – excluding those from Malampaya – should accrue to the MIF,” Surigao del Sur Rep. Johnny Pimentel said in a statement.

Pimentel said the commercial development of another gas field comparable in size to Malampaya could easily yield a windfall of more than P500 billion in government royalties over a 20-year period.

“Right now, the Malampaya royalties accrue to the national treasury every year and help fund the national budget. This is okay since the project’s gas deposits are nearing depletion anyway,” Pimentel said.

“However, once the Sampaguita gas discovery is eventually developed, we would want 100 percent of the royalties to be invested in the MIF for the long-term benefit of the Filipino people,” Pimentel said.

Pimentel is former chairperson of the House strategic intelligence committee. He is also proponent of a bill that seeks to appropriate P5 billion for the installation of new naval forward operating bases to secure the West Philippine Sea’s gas and oil deposits for the country.

The House of Representatives plans to establish the country’s first-ever sovereign wealth fund.

Under House Bill No. 6398, the proposed Maharlika Investment Fund would be invested in an array of both real and financial assets to create a nest egg for the country and to further spur national economic development.

Pimentel welcomed the decision of the House committee on banks and financial intermediaries to abandon plans to involve the Social Security System (SSS) and the Government Service Insurance System (SSS) in the MIF.

“We cannot include the SSS and GSIS in the MIF. It would be untenable. The national government itself should put in all the money for the MIF,” Pimentel said.

Nearly 50 countries around the world have established sovereign wealth funds, many of which are funded by surplus government revenues or reserves.

The Malampaya Deepwater Gas-to-Power Project has been extracting gas and condensate from the depths of the Palawan basin in the West Philippine Sea since 2002.

The national treasury collected P19.8 billion in royalties from Malampaya in 2021 alone, up from P19.1 billion in 2020, Pimentel said, citing figures from the annual Budget of Expenditures and Sources of Financing submitted by Malacañang to Congress.

Without spending a single centavo, the Philippine government, as owner of the gas and oil under the seabed, collects as royalty 60 percent of the net proceeds from Malampaya’s petroleum business.

Malampaya was originally operated by Shell Philippines Exploration B.V. but is now being run by billionaire Enrique Razon Jr.’s Prime Infrastructure Capital Inc.

Prime Infra is believed to be looking to further extend Malampaya’s existing 504-kilometer subsea pipeline to convey all future gas supplies that may be harvested from Sampaguita to power plants in Batangas.

Another Razon-controlled entity, Monte Oro Resources and Energy Inc., has a 30 percent participating interest in the petroleum service contract that covers Sampaguita, which is located 250 kilometers southwest of Malampaya.