Philippines says to sign $1.5 bln natural gas project expansion

MANILA, July 22 (Reuters) - The Philippines said on Friday it expects to forge a deal with consortium partners next month to develop the $1.5 billion second and third phases of the Malampaya natural gas project to increase production at the gas field southwest of the capital.

The government, through state-run PNOC-Exploration Corp (PNOC-EC) , holds a 10 percent stake in the Malampaya project. The rest is owned equally by Shell Philippines Exploration B.V., a unit of Royal Dutch Shell (RDSa.L) and Chevron Malampaya LLC, a unit of the U.S. energy firm .

"We have formed an inter-agency team to get the permits," Energy Secretary Jose Rene Almendras told reporters. "We are also asking PNOC-EC to get ready for its share of investments."

He said the second phase of the project would likely begin early next year and was expected to be completed in four years.

Malampaya supplies gas to power plant operators First Gas Power Corp, a unit of First Gen Corp , and San Miguel Energy Corp, a unit of conglomerate San Miguel Corp .

The project currently supplies enough gas to generate up to 2,700 megawatts of power a day, providing more than 30 percent of the power needs of the country's main island of Luzon.

Energy department officials previously said the Malampaya consortium was planning to increase gas sales by enough to generate an additional 300 megawatts. The group has committed to supply gas to power producers for a period of more than 20 years.

The consortium had spent about $1.2 billion to develop the first phase of the project between 2002 and 2006. At that time, the project was the largest by any foreign investor in the country. (Reporting by Rosemarie Francisco; Editing by Ramthan Hussain)