SMC to join auction for Malampaya gas reserves

By Alena Mae S. Flores – July 02, 2018 at 07:50 pm

Conglomerate San Miguel Corp. expressed interest to bid for Philippine National Oil Co.’s banked gas from the Malampaya natural gas project in northwest Palawan, its top executive said Monday.

SMC president Ramon Ang confirmed that the company was looking into the sale of 97.67 petajoules of banked gas or unutilized gas from the Malampaya gas project.

“Yes we are interested,” Ang said when asked about the banked gas sale.

San Miguel manages the electricity output of the 1,200-megawatt Ilijan natural gas plant in Batangas under its independent power producer agreement with the government.

The Ilijan plant, now operated by Kepco Philippines, sources its gas supply from the Malampaya consortium.

Ang earlier said San Miguel could expand the capacity of the Ilijan natural gas power plant by another 1,800 MW, once liquefied natural gas became available in the country.

“For Ilijan, we will retain [it] as gas [power plant] and we may even expand that. Floating terminal or regas needs at least 3,000 MW to be economical,” Ang said.

Ang also expressed willingness to team up with First Gen Corp. for the planned LNG facility in Batangas.  No agreement was signed yet.

State-run PNOC scheduled the submission of offers from interested parties at 2 p.m. on July 23. PNOC wanted to use the banked gas to finance its entry into the planned first integrated LNG facility.

PNOC said interested parties should consider the maximum average delivery quantity of 32.22 terajoules per day with the delivery point at the Malampaya onshore gas plant in Batangas or mutually agreed upon.

PNOC said the banked gas should be consumed by Feb. 23, 2024.

The government previously estimated that the sale of the banked gas could fetch about $650 million.

The Management Association of the Philippines earlier expressed concern that the banked gas could no longer be withdrawn because of technical constraints.

MAP, one of the country’s active business organizations, said in its position paper that  “there is currently no commercial arrangement for its withdrawal from the reservoir.”

“There are only six more years till the SC-38 contract expires and there is no technical solution to withdraw the banked gas within this time frame,” MAP said.

It said PNOC should discuss immediately with the SC 38 consortium and the Energy Department their options and come up with an agreement.

The consortium is composed of Shell Philippines Exploration B.V., as the operator, Chevron Malampaya Llc and PNOC Exploration Corp. The consortium’s contract with the government will end by 2024.

“Otherwise, the gas will be stranded,” MAP said.