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Sampaguita oil field: The reason why the Indonesian Salim is dead set on Malampaya

Last of 3 parts

INDONESIAN magnate Anthoni Salim’s determination to move heaven and earth to acquire the Malampaya Gas Field project, is inexplicable on the surface, since its gas deposits are expected to start running out in 2024 or 2030. “Fighting for scraps,” an ignorant, but know-all writer insisted.

Read on though, and you will be surprised at the real reason.

Salim’s firm PXP Energy lost the auction by Chevron of its 45 percent shares in Malampaya to Chinese Filipino Dennis Uy in October 2019, and Pilipinas Shell’s in May 2021. The Salim conglomerate bid too low at $350 million, expecting no other interested party would be able to raise the at least $560 million needed to acquire the Chevron shares.

Salim, through his top executive Manuel Pangilinan, scrambled to get PNOC Exploration, which holds 10 percent of the Malampaya shares, to sell its right to match Uy’s bid. PNOC Exploration rebuffed the offer, with its officials telling President Duterte that it would open them to corruption charges as it would be tantamount to a government agency favoring a private enterprise. (See last Monday’s column.)

From author’s book Debacle.

And then in a last desperate move, Senators Sherwin Gatchalian, Risa Hontiveros and Vicente Sotto 3rd — all needing funds for their election bids in May 2022 — pressured the Energy department to rescind the purchase on very erroneous grounds, first, that the private transaction required the prior approval of the Department of Energy. And second, a very stupid reason, that Uy’s firm cannot afford the purchase.

So, you have the son of a plastics manufacturer, an activist and an actor-comedian most of his working life, claiming better financial expertise than the advisors of Chevron, the second largest company in the US.

These desperate moves though aren’t really surprising because of the real prize for taking over the Malampaya Gas Field project: it will be the private-sector partner of the China National Offshore Oil Corp. (CNOOC) in extracting hydrocarbons from the Sampaguita Field in the Reed (Recto) Bank, estimated to have three times the deposits of Malampaya, which is just 200 kilometers from it.

Malampaya is just 200 kilometers southwest of the so-called Sampaguita Field in Service Contract No. 72.

First Pacific

First Pacific had gained control in the past decade of Forum Energy, which has SC 72, or the authority given by government to explore and extract for gas in the Sampaguita field. When gas deposits were confirmed in mid-2000 to be even thrice that of Malampaya, First Pacific had to spend a total of P50 billion to acquire it. (See my book Debacle for details.)

Salim was so intent on extracting as soon as possible gas and oil from SC 72, that he ignored China’s objections to it, on grounds that it was within its Nansha group of islands which it claimed sovereignty over. It blocked First Pacific’s survey ship Veritas Voyager in March in 2011. President Aquino 3rd blew his top and vowed that he would “defend Recto Bank as much as he would defend Recto Avenue” — an empty boast. First Pacific would to this day desist from sending any more exploration vessels there.

We cannot ascertain whether President Aquino 3rd and his foreign secretary Albert del Rosario were simply enthusiastic to please Salim.

But Aquino 3rd, under del Rosario’s direction, undertook a reckless, unthinking campaign to force China — a superpower — to allow Salim to extract gas in the Sampaguita field, even to to the disastrous extent of trying to get the US military might behind it and to file a P1 billion suit to declare illegal China’s claim on the Sampaguita field. (I have explained the details of this most sordid phase of Aquino 3rd’s rule, providing voluminous documentation in my book Debacle: The Aquino Regime’s Scarborough fiasco and the South China Sea Arbitration Deception, copies of which are available on my website, rigobertotiglao.com/shop.)

A glimmer of hope for Salim to at least recover his conglomerate’s P50 billion investment, and at best to revive his dream of becoming a regional energy giant, emerged after President Duterte moved to repair the huge damage of his predecessor in our relationship with China and to develop friendly relations with it.


On Nov. 20, 2018, the Philippines and China signed an agreement titled “Memorandum of Understanding on Cooperation on Oil and Gas Development” between the two governments.

While the pandemic had put a hold on the implementation of the memorandum, it at least opened a way down the line for shelving the disputes in the South China Sea, and to undertake joint development of the resources in those areas by the Philippines and China.

Under the memorandum of agreement, the two governments will designate the company that would enter into joint development of SC 72, for the Chinese likely the CNOOC, the Chinese state firm focused on such exploration.

Salim would have invoked the fact that it is his company that has the contract to extract hydrocarbons in that part of the Reed (Recto) Bank covered by SC 72, and therefore should be CNOOC’s partner.

However, that contract with the Salim firm ends in 2024. The energy department has the discretion to extend it. However, a more rational move — especially if the Chinese demand it — is for the partner to be the Malampaya Gas Field project which, to Salim’s dismay, is now 90 percent owned by Uy.

Salim’s PXP itself explained the value of Malampaya to SC 72 in its Nov. 8, 2019 letter that attempted to block Uy’s purchase of the Chevron shares: “The Malampaya infrastructure is positioned strategically in the West Philippine Sea, an indigenous gas production hub to enable the economic development of Sampaguita and other discoveries in SC 72.”

One important Malampaya infrastructure, costing at least $2 billion, consists of the plant that processes the gas in a nearby shallow water production platform and transports it across three provinces through a 504-km underwater pipeline. An onshore gas plant in Batangas receives the gas for further processing, before it is sent to five power-plant customers.

The Philippines therefore could make a joint development with Malampaya attractive to the Chinese as only a short (200 km) pipeline would have to be built to transport the gas extracted there through the Malampaya gas pipeline to Luzon island. That would mean huge billion-dollar savings for the joint venture. But that would of course require Malampaya to be CNOOC’s partner.

In his November 2020 column “South China Sea as Zone of Peace,” in the Philippine Daily Inquirer, the anti-China writer Antonio Carpio was unexpectedly all praises of the Philippines-China memorandum: “Once the Chinese firm enters into a commercial agreement with Forum Energy to extract gas from the Reed Bank, authorized by the memorandum,” Carpio wrote in his column, “the formula for a peaceful settlement of the intractable South China Sea maritime dispute would have been found.”

However, with Forum Energy — which Carpio never mentioned in his hundreds of articles as owned by Salim — unlikely to be the Philippine partner of CNOOC in the joint development of SC 72, to be replaced by Malampaya, now owned by Uy, expect his writers and organizations that he and del Rosario control to raise hell against the Filipinization of Malampaya.

One ignorant Filipino American, Rodel Rodis, who always tries to put down the Philippines, even claimed that he and Duterte basher Loida Nicolas had filed a complaint at the US Securities and Exchange against Uy, “to protect the assets in Malampaya that belong to the Filipino people.” Doesn’t he know that First Pacific is 45 percent owned by the Indonesian magnate Salim and 35 percent by US hedge and pension funds?

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This Post Has One Comment

  1. Dorina Rojas

    So now Salim has allies in Loida Naloka Lihis and Rodaldal Reckless, all pretending to be Filipinos, but behave worse than mad dogs . I wish they would be imprisoned in some gas chamber and be injected with Covid virus . Even the lowliest Filipino animal species will be embarrassed to be identified with them.

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