DOE says no to PXP’s integrated gas proposal

The Department of Energy has turned down an unsolicited proposal from the MVP group, in which PXP Energy Corp. intends to combine its natural gas prospect at the Recto Bank and the existing Malampaya project to build an integrated gas hub.

DOE officials, in a briefing on Monday, said this was mainly due to Chevron Philippines having already made a deal with Davao-based businessman Dennis Uy’s Udenna Corp.

“We advised PXP that [we cannot entertain] their proposal,” Energy Undersecretary Leonido J. Pulido III said.

“The reason is very basic,” Pulido said. “We have PCECP and under that legal framework, we only have two ways to award service contracts and oil exploration permits—one is through pre-determined areas and nomination.”

PCECP refers to the Philippine Conventional Energy Contracting Program, through which interested investors can vie for service contracts that cover prospective areas from among a list prepared by the DOE — predetermined areas — or apply for contracts that cover areas of their own choosing.

“However, what they (PXP) did is they submitted an unsolicited proposal over an area with an existing service contract so we had to deny that,” Pulido said.

Last month, Udenna announced it had signed a share purchase agreement with Chevron related to the latter’s 45-percent stake in the Malampaya project.

Under PXP’s proposal, submitted to the DOE also last month, the Malampaya infrastructure and distribution network is envisioned to support the continued development of the Malampaya resources, as well as the economic development of Sampaguita Field and other nearby prospects at Recto Bank.

The integrated project is intended to ensure energy security in the Philippines, with indigenous natural gas resources, for the next 25 years.

Based on interpretation of previous surveys made at Recto Bank, the petroleum field called Sampaguita contains 2.5 trillion cubic feet of recoverable gas.

Such volume is comparable to that of the Malampaya deposit, which has been providing fuel to several power plants with a combine generating capacity of 3,200 megawatts. INQ