Malampaya gas placed on auction block

NATURAL gas from the Philippine National Oil Company-Exploration Corp. (PNOC) and Shell Philippines Exploration B.V. (SPEX), which operates the Malampaya gas platform, has been put up for auction, the Department of Energy (DOE) said.

DOE Undersecretary Zenaida Monsada told reporters that PNOC, PNOC-Exploration Corp., SPEX and Chevron Malampaya LLC were jointly selling their respective gas volume entitlements under Service Contract 38, which hosts the Malampaya gas platform.

Interested investors must submit a letter of intent by April 10, attend the pre-bidding conference on April 16 in Makati City, and pay a non-refundable bid documents fee of P2 million.

The date of the actual bidding will be set after the pre-bidding conference, after investor questions and concerns have been gathered, Monsada said.

The banked gas is set to be extracted around end-2015 and delivered to the winning bidder from Jan. 1, 2016 up to Feb. 23, 2024.

Earlier, Energy Secretary Carlos Jericho L. Petilla said that the total volume of banked gas to be bid out may be able to run a 400-megawatt (MW) power plant until 2024.

By that time, the service contract for Malampaya will end.

SPEX has said its stockpile may be enough for a 150-MW power plant and that PNOC has about the same volume.

The DOE has said the potential of the government-held banked gas alone may still be able to run a 150-MW facility.

Petilla has suggested that the price of the banked gas may be benchmarked against the price of Malampaya gas during the bidding.

He also said earlier that he would rather the banked gas be sold to new power plants that can help ease power supply concerns.

Around 2016 or 2017, new power plant facilities and new fuel supply (through the liquefied natural gas import terminals planned by various investors) are expected to be in place.

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, lower-than-projected demand for electricity in the wake of the Asian financial crisis (1997-1998) and delays in power transmission projects left the stockpiled gas unused.

When the energy sector was deregulated, ownership of the gas inventory changed hands from Napocor to the Power Sector Assets and Liabilities Management Corp. – a state firm tasked to privatize Napocor’s assets – and to the DOE.

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