By Lenie Lectura – December 10, 2018
from Business Mirror
THE Philippine National Oil Co. (PNOC) said last week two more power firms have expressed keen interest to purchase the remaining 97.67 petajoules (Pj) of Malampaya’s banked gas, valued at $700 million to $750 million, via a negotiated scheme.
“We have positive developments for banked gas. Aside from two existing gas plants—First Gen and Ilijan—now, there are two new showing interest,” PNOC President Rueben Lista said.
He did not identify the two interested firms. He only said “one is putting a plant in Limay and the other in Batangas.”
“They are willing to negotiate with me on the price. They have been talking to me, but I requested them to submit an official of letter of intent, a proposal,” he added.
For now, none of the four interested firms have submitted a proposal to the PNOC.
Limay LNG Power Corp. earlier told the Department of Energy (DOE) it is planning to build a liquefied natural gas (LNG) facility for its own use, meaning the gas would be used to power its own power plant.
The DOE earlier cleared the conduct of a grid impact study on its planned 1,100- megawatt (MW) LNG power plant in Batangas.
Limay LNG had signed on foreign entities, including a unit of Anglo-Swiss commodity trader Glencore Plc., as partners in the project either to handle engineering, procurement and construction (EPC) or project financing.
The PNOC board authorized the PNOC management to enter into comprehensive discussions or negotiations below the $6.616 per gigajoules under the Ilijan gas-fired power plant’s gas and sale purchase agreement (GSPA) price with each offer and all other potential offers.
Ilijan power plant has a contract with the Malampaya consortium that will expire in 2022.
When asked how much PNOCwill sell the banked gas, Lista said negotiations would start from the Ilijan price and “even if it goes down a little bit, we still can make money.”
The utilized banked gas accumulated when the 1,200-MW Ilijan power plant failed to fully utilize its contracted gas mainly due to dispatch constraint at the time when the plant was just in its initial years of operations.
Lista had said that part of the banked gas was sold to Power Sector Assets and Liabilities Management Corp. (PSALM) for P937,000 for 4.61 Pj and to Shell Philippines for P2.3 billion for P6.33 Pj.
First Gen Corp. of the Lopez group had said it was willing to discuss with the PNOC a reasonable price for the Malampaya banked gas.
First Gen had actually submitted an offer to buy the government’s remaining 97.67 Pj of Malampaya banked gas at $3.48 per gigajoules.
“We submitted an offer and we don’t know what happened with it. But we continue to maintain the position that if the banked gas is sold at a reasonable price, we could actually utilize it,” First Gen Director and EVP Richard Tantoco said.
“It would be a source of relief for the consumer that’s reeling with inflation right now. It’s the right time to unleash that today for the consumer.
“They have the authority to negotiate at a lower price,” Tantoco said.
Should the government and First Gen enter into a deal, Tantoco said the banked gas would be utilized by its 414-MW San Gabriel gas plant.
“The banked gas from PNOC will allow us to help government burn or it could be a stranded asset and then still offer the much-needed relief. San Gabriel, instead of drawing out of the existing agreements of the other plants, can draw on this,” Tantoco added.