Shell, PNOC consider sale of banked gas

MANILA, Philippines–The Philippine National Oil Company (PNOC) and global oil firm Shell are mulling over plans to jointly auction off their respective stockpiles from the Malampaya natural gas project.

Sebastian Quiniones, managing director of Shell Philippines Exploration BV (SPEX), told reporters that the expected auction could take place “within the year.”

SPEX operates the Malampaya gas platform.

Asked how much gas would be up for bid, Quiniones pointed to Shell’s stockpile which could be enough to run a 150-megawatt (MW) power plant until 2024.

PNOC also has about the same volume, he added.

The terms of reference are presently being fine-tuned, Quinones said.

The Department of Energy earlier said that the banked gas potential held by the government alone could power up a 150-MW gas-fired facility for the same number of years.

But based on some technical studies, the banked gas would only be enough to sustain a 100-MW plant.

Energy Secretary Carlos Jericho L. Petilla suggested that, during the bidding, the price of the banked gas could be benchmarked with the price of Malampaya gas.

Petilla also said that he would prefer the banked gas to be sold to new power plants. This will help ease electricity supply concerns seen in the summer of 2015.

Around 2016 or 2017, new power facilities and fuel supply (through the liquefied natural gas import terminal of Shell) should be in place, he said.

In December 1997, the National Power Corp. (Napocor) contracted and paid for minimum allocations of natural gas from Malampaya for the Ilijan power plant. However, the stockpiled gas was not used because of lower-

than-projected demand for electricity in the wake of the Asian financial crisis (1997-’98), and delays in power transmission projects.

Due to the recent deregulation of the energy sector, ownership of the gas inventory changed hands from Napocor to the Department of Energy and the Power Sector Assets and Liabilities Management Corp.—a state firm tasked to privatize Napocor’s assets.

PNOC later bought the P14-billion banked gas from the DOE and allocated the resource to the Batangas-Manila (BatMan 1) pipeline project.

But PNOC has yet to finish the feasibility study for BatMan1 even though several local and foreign firms have expressed plans to build power generation plants along the pipeline route.