by James Loyola, 24 March 2015
from Manila Bulletin
San Miguel Corporation (SMC) is interested in bidding for the privatization of the Malampaya Deep Water Gas-to-Power pipeline which it sees as “the deal of the century” worth around $10 billion.
According to SMC President Ramon S. Ang, the Malampaya gas pipeline “will be one of the biggest projects that the government will be bidding out.”
The government is expected to rebid the facility once its franchise expires by 2021. Its current operator, Shell Philippines Exploration, will have to turn over the project to the government under the rules of the build-operate transfer scheme.
While the original well the pipe is servicing is seen to run out of gas soon, Ang noted that the value of the facility is in its potential to service future finds in the area given the number of service contracts that the government has awarded to oil exploration companies.
“To rebuild another line like that today would cost $10 billion,” said Ang. The Malampaya project is regarded as one of the longest deepwater sub-sea pipeline in the world at 504 kilometers.
It extracts natural gas from the Malampaya gasfield covered by service contract 38 that is condensed and is delivered straight to power plants that use this to generate electricity.
Ang also reiterated San Miguel’s commitment to the Philippine infrastructure plans and said the firm will participate in all the projects that will be bidded out under the private-public partnership scheme (PPP).
For his part, Public Works Secretary Rogelio Singson said the Department of Public Works and Highway aims to bid out the PPP projects it had calendared for 2014 by the middle of the year.
Ang yesterday urged the Aquino Administration to bid out as much Public-Private Partnership (PPP) projects as possible before it steps down from office by mid 2016, including the Malampaya Deep-Water-Gas-to-Power project with the looming contract expiry by 2022.
“We are ready to bid whenever government is ready,” Ang told reporters during the sidelines of the Philippine Investment Forum yesterday in Makati City.
Even if the Malampaya gas field is supposed to run out of gas by 2022, Ang said the infrastructure remains interesting
“What you’re after is the pipeline and the platform,” Ang said, referring to the offshore infrastructure located 80 kilometer northeast of Palawan Island that is connected to an onshore power plant in Batangas through a 504-kilometer underwater pipeline.
“Even if there’s no more gas there, there will be other sources nearby that can be tapped. All you need to do is connect it to the existing facility,” Ang said in the vernacular.
As of press time, the Aquino Administration has no clear announcement yet on the future plans for the Malampaya project. The Malampaya deepwater gas-to-power project supplies natural gas to three power plants—Sta. Rita, San Lorenzo, and Ilijan—with a combined capacity of 2,700 megawatts or 45 percent of Luzon’s power requirements.
Respective of what happens in Mindanao, development continues,” he said. “Once investors see the peace process continue, take root, move on, they see opportunities.”