PNOC, Chinese firm eye gas supply deal with Malampaya

China’s Synergy International Resources Group Co. Ltd. and Philippine National Oil Co. (PNOC) have expressed interest to enter into a gas sales agreement with the Malampaya consortium, a ranking energy official said.

Energy Undersecretary Guillermo Balce said Synergy and PNOC subsidiary PNOC-Exploration Corp. (PNOC-EC) are particularly eyeing the expected 500-megawatt (MW) additional gas output of the Malampaya deep water gas-to-power project.

The Malampaya consortium, which operates the 2,700 MW project, has opened the market for a new gas supply and power purchase agreement (GSPA) for its additional gas production.

"They have started opening the market for a new GSPA for up to 500 MW of capacity, maybe more. They are entertaining offers and all them are very diligent of their offers," Balce said.

The $4.5-billion Malampaya project currently supplies power to three natural gas power plants – Sta. Rita, San Lorenzo and Ilijan all in Batangas. It provides about half of the requirements of the Luzon grid and 30 percent of the entire power needs of the country.

PNOC-EC holds a 10 percent investment in the Malampaya project. The other members of the consortium are Shell Philippines Exploration B.V. and Chevron Texaco with a 45-percent stake.

According to the DOE official, PNOC-EC’s interest in the additional gas output would complement its existing Batangas-Manila (Batman 1) transmission gas pipeline.

The parties can use the gas pipeline to transmit the gas to a power plant in Luzon.

"PNOC-EC and Synergy plans to put up a greenfield plant that will utilize 500 MW of Malampaya. They can build the power plant in Talim Island in the middle of Laguna Lake," Balce said.

The interest of Synergy stemmed from its initial indication of putting up a compressed natural gas (CNG) project in the Philippines. The Chinese firm had said it is ready to pour in some $200 million for the CNG project.

Last year, Synergy already signed a memorandum of understanding (MOU) with the Department of Energy for a mutual cooperation. Based on the MOU, Synergy will construct a CNG refueling system which includes mother-daughter refilling stations, mobile refueling facility and other facilities deemed necessary.

Synergy, headquartered in Schenzen, has over 25 years experience in the design, building, deployment and operation of CNG and liquefied natural gas (LNG) equipment technology and methodologies in China.