The Department of Finance (DoF) is expecting that government's royalties from the Malampaya deep water-to-gas project field to reach P18.37 billion this year and in 2011.

Finance department data showed royalty collections from the sale of natural gas from Malampaya in Palawan, which is the country's largest petroleum reserve, will reach P9.185 billion this year and another P9.185 billion next year.

The royalties are equivalent to 60 percent of the net proceeds from Malampaya sales.

DoF had said royalties from the Malampaya which proponents remit to state coffers yearly will continue even if the much-coveted government stake in Philippine National Oil Company-Exploration Corporation is sold to private investors.

But Energy Secretary Rene D. Almendras, said the government has no immediate plans to sell PNOC -EC's stake in the Malampaya natural gas project because the “upside value is very good.”

Service Contract 38 covers the right to explore, develop and utilize Malampaya gas off the province of Palawan. PNOC-EC, Shell Philippines Exploration B.V. (SPEX) and Chevron Malampaya LLC are partners in the exploration and development of this service contract.

The previous government was trying to sell PNOC-EC’s 10-percent stake in Service Contract 38 as part of its privatization program. It hopes to raise P17 billion from the transaction but critics have noted that the government has not been transparent when it opted for a negotiated sale with interested  investors.

Essentially, the sale of its stake in Service Contract 38 means that the government is selling its much-coveted stake in the Malampaya project, considered a crown jewel in the energy sector.

The Aquino administration earlier said it is abandoning its predecessor’s privatization strategy by favoring long-term lease on prime real assets over outright sale.

Finance Secretary Cesar V. Purisima, said the government is finalizing its inventory of all state assets, including the Malampaya and will soon determine which prime properties will be privatized.

“We will review our privatization strategy. We want to continue to raise income without selling the nation’s jewels,” he said.

Purisima said the government will likely start with long-term lease development of the Welfareville compound in Mandaluyong, the National Penitentiary in Muntinlupa, the Davao Penitentiary and the Navy properties along Roxas Boulevard and at Fort Bonifacio.