Energy City project to cover supply shortfall as Malampaya cuts output

MANILA, Philippines — Further delays in jumpstarting a private sector proposed LNG project in Bataan would negatively impact the country’s energy security, proponents said over the weekend.

This as the Philippines may face an energy shortage due to the looming depletion of the Malampaya deep water gas to power plant in offshore Palawan.

Against this backdrop, the proposed Energy City project can help augment supply as it would be a major LNG terminal in country.

The project, proposed by Gregorio Araneta Inc. (GAI), the holding company of businessman Gregorio Araneta, is envisioned to be located in the Bataan industrial park of PNOC-Alternative Fuels Corp. (AFC). GAI’s partners in the project are Japanese giants Mitsui and Osaka Gas.

The planned LNG facility would be developed in phases starting with an initial phase that would have a capacity of 600 megawatts and an investment of roughly $1.2 billion.

However, the project is facing delay because the PNOC is seeking higher lease rates and is also looking to bid out the project and invite other partners in contrast to what GAI and the government earlier agreed on.

GAI submitted the unsolicited proposal  to PNOC for approval as far back as 2012 to supply the power needs of Luzon in time when the Malampaya gas thins out in 2022.

PNOC and GAI had entered into negotiations for the leasing rates for the property.

However, when President Duterte was elected into office, the PNOC and the Department of Energy said they now want to open the project to other proposals.

“First of all, the reason you have LNG terminal and LNG powered power plants is for energy security,” Araneta said.

He said GAI already made significant investments and spent years planning the project.

“It took so much time to put this project up and all this time and all the effort has been there. And if they are going to bid it out now, they will delay the project, which will affect energy stability,” Araneta told reporters on Friday.

LNG is natural gas that has been converted into liquid for ease of storage or transport.

The government and some of the country’s energy players have stressed the need to have an LNG facility in the country especially with the looming depletion of Malampaya gas.