DOE eyes creation of ‘energy city’

The Department of Energy plans to create an “energy city” in Batangas to be composed of liquefied natural gas (LNG) facilities. This will serve as a back up plan to whatever may happen with the Malampaya deepwater-to-gas project off Palawan.

Energy Secretary Alfonso G. Cusi said on the sidelines of a Senate hearing Tuesday that the DOE had already started studying the idea as the Malampaya project was now being hounded by several critical issues, namely, the extension of Service Contract No. 38, which will expire in 2024, depletion of gas reserves and the allegations that the consortium—composed of Shell Philippines Exploration BV, Chevron Malampaya LLC and PNOC Exploration Corp.—has been shortchanging the government by not paying the proper taxes since it started commercial operations in 2002.

In the same hearing, Commission on Audit COA supervising auditor Flovitas Felipe claimed the Malampaya consortium owed the government P151 billion.

“We are preparing for any eventuality such as in the case that the government and the consortium will not agree on the extension. We are now doing something—we are studying the continuity of the operations of the Malampaya because it is important, since it supplies gas (to power facilities that can generate) 2,700 megawatts (for the Luzon grid),” Cusi explained.

“(Our back up plan would be) to put up an LNG farm in Batangas that could continue supplying gas to the power plants. We initiated the study through Philippine National Oil Corp. (PNOC). But there has been a lot interest from the private sector for this particular project,” he added.

The Malampaya platform provides natural gas to major energy facilities that account for 40 percent of the power requirements of the Luzon grid. These included the 1,200-MW Ilijan plant, which is operated by the local unit of Korea Electric Power Corp., as well as to the 1,000-MW Sta. Rita and 500-MW San Lorenzo gas plants, which are both under First Gen Corp.

“We are doing this in case SC 38 is not renewed. Because if that happens, then the projects reverts to the government which will have to continue its operations. But we also have the option to privatize it or engage the services (of third party operators),” the DOE chief explained.