Preliminary study shows gas pipeline to Manila feasible

The proposed $1.3-billion Batangas-Manila natural gas pipeline project has been found feasible enough for the government and private firms to pursue, according to the preliminary report conducted by the Japan International Cooperation Agency (Jica).

Energy Undersecretary Jose M. Layug Jr. said the project’s feasibility was based on certain assumptions on supply and demand, which he cautioned would have to be reviewed carefully. Based on the projected demand, the BatMan 1 project would need an anchor load of 600 MW, he added.

“They have a projected supply and demand. As an example, they have projections on supply based on the Malampaya reserves. So we advised them to talk with [the consortium operating the] Malampaya gas field off Palawan to ensure that their basis and view of the reserves are aligned with that of the consortium,” Layug said.

However, Layug noted that the preliminary report involved the feasibility only of the 100-kilometer pipeline. Jica has yet to present its findings on the needed LNG receiving terminal, a power plant that would provide the so-called anchor load for the pipeline and other related infrastructure.

Jica suggested to the government three models that it could use to move forward the capital-intensive gas project. Layug identified these as full private undertaking, purely public undertaking or under the public-private partnership (PPP) program.

The complete report by Jica is expected by December this year or early January 2012. By then, the Department of Energy will be able to review the study internally and hopefully come up with the bidding terms of reference (TOR) for the BatMan 1 pipeline project by the third quarter.

The Jica study is expected to re-evaluate opportunities in the natural gas industry and identify which infrastructure will be deemed as priority projects and what kind of investments will be needed. It will also evaluate the viability of importing natural gas and the potential sources. It will likewise contain a validation of the supply and demand statistics as this will spell out the viability of the natural gas program.