BY LENIE LECTURA – AUGUST 22, 2022
from Business Mirror
South Premiere Power Corp. (SPPC), a unit of SMC Global Power Holdings Corp. (SMCGP), purchased the remaining banked gas of the Philippine National Oil Co. (PNOC) for $1.2 billion.
“We already bought the banked gas, $1.2 billion. The banked gas that we bought is good for 5 years. Yes, we bought all the remaining banked gas,” San Miguel Corp. (SMC) President Ramon S. Ang said in an interview.
Based on a filing, SPPC entered into a gas supply agreement for 70.26 petajoules of banked gas with PNOC at a daily volume of dispatch sufficient to run the Ilijan Power Plant at 45 percent to 75 percent plant factor. This volume of gas is adequate and expected to support the Ilijan power plant’s fuel requirements until February 2024. To date, the delivery of the banked gas by PNOC has yet to commence.
The PNOC, for its part, confirmed that it sold the remaining uncontracted banked gas to SPPC under the Gas Sale and Purchase Agreement (GSPA) executed on June 23.
“The banked gas is intended to supply the Ilijan power plant until full delivery of the total contract quantity on or before February 23, 2024. However, the said delivery has not commenced as the SC38 Consortium or the Malampaya consortium and its operator, Shell Philippines Exploration B.V. (SPEX), have yet to comply with the series of directives by the DOE (Department of Energy),” PNOC said.
The agency is requiring them to immediately resume the supply and maintain the allocation of natural gas minimum daily contract quantity of banked gas to the Ilijan Power Plant, pursuant to the GSPA.
The sale of PNOC’s remaining uncontracted banked gas assures that PNOC’s remaining pre-paid banked gas, one of its biggest assets, will not be stranded and will be fully monetized. Further, it will ensure the uninterrupted operations of the Ilijan Power Plant, which is one of the largest natural gas power plants in the country, thus securing sufficient and affordable power supply in the Luzon grid.
In addition to the banked gas, SPPC will commence purchase of commercial liquefied natural gas (LNG) for the Ilijan power plant once the LNG Terminal, currently being built and to be operated by Atlantic Gulf and Pacific Co. besides the Ilijan plant, commences operation later this year.
Currently, the country’s main source of natural gas is the Malampaya gas field, which accounts for 20 percent of the country’s electricity. It is expected to be nearly depleted by 2027.
The DOE earlier reported that the country’s natural gas output from January 1 to June this year stood at 60,951 million standard cubic feet (MMcf), bringing to 2,572,830 billion cubic feet (Bcf) the total production since 1994.
According to the agency, consumption by power generation sourced from Malampaya stood at 53,411 MMcf in January to June. Meanwhile, the banked gas consumption for power generation in the same period stood at 4,825 MMcf. These brought the total gas consumption for the first half to 58,237 MMcf.
The agency did not provide comparative figures. It only provided yearly figures starting 1994.
In 2020, gas production declined to 141,732MMcf from 155,495 MMcf in 2019. In 2021, the DOE recorded gas restriction incidents as it ended the year with a lower output of 121,089 MMcf.
Of the total gas output recorded from 1994 to June 2022, 2,428,387 Bcf was utilized for power generation, 37,766 MMcf for industrial, 184cf for transport, 4,978 MMcf of banked gas for power generation, and 2,967 MMcf of banked gas for industrial. Total consumption was recorded at 2,474,283 Bcf.
Gas production peaked in 2019 at 155,495 MMcf.
The DOE said banked gas consumption for power generation covered the period of December 26, 2021 to June 30, 2022.
The DOE defines banked gas as the accumulated unused gas of the Ilijan plant because of the underutilization of the plant’s take-or-pay quantity from 2022 to 2007.
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