DOE backs bulk buying of gas
MANILA -The gas aggregation strategy proposed by Razon-led Prime Infrastructure Capital Inc. and the Lopez family’s First Gen Corp. could help soften the prices of imported liquefied natural gas (LNG), the Department of Energy (DOE) said, especially as output from the Malampaya gas field continues to decline, exposing consumers to risks of higher electricity rates.
Gas aggregation combines the gas needs of multiple consumers to form a single purchasing entity.
Energy Secretary Raphael Lotilla explained that the Ukraine-Russia war had caused a surge in LNG prices at a time when the country was scrambling to get additional electricity sources.
“That’s what we are trying to prevent from happening in terms of spikes in the price of imported LNG. The plan is to blend the lower price of Malampaya natural gas with the imported LNG so that we can soften the impact or the volatilities of imported LNG,” Lotilla said, referring to the strategy proposed by the two companies.
Gas aggregation was earlier proposed by Prime Infra, which holds a 45-percent operating stake in the Malampaya deep water gas-to-power concession that was recently extended by another 15 years, to provide the lowest cost possible for power consumers.
According to Prime Infra, the gas aggregation framework will help enhance energy security, encourage a more competitive market for power generation and complement ongoing commercial development of new indigenous natural gas fields.
The company later entered into an agreement with First Gen to lease the latter’s LNG terminal in Batangas province and support the proposed strategy.
The search for fuel options
Under the extended Malampaya contract approved by President Marcos, the consortium—composed of Prime Infra, Davao-based businessman Dennis Uy’s Udenna Corp. and the state-owned PNOC Exploration Corp.—is required to develop additional supply around the reservoir.
Prime Infra is set to begin drilling next year in the near fields, such as Sulu Sea, Lotilla said.
“The gestation period for the full development of all the other alternative gas fields will take some time,” the energy chief said, adding that the importation of LNG could help secure additional gas supply for the 1,200-megawatt Ilijan power plant.
“By 2025 or 2026, if we are lucky, there will be more LNG supply coming on stream globally and therefore the expectation is that prices of LNG will soften as well,” Lotilla added. INQ