Almendras backs more coal production for power supply

MANILA, Philippines - Energy Secretary Jose Rene Almendras is supporting the exploration of more coal resources to ensure the country’s energy supply security.

He said at present, the cheapest and easiest way to produce power is through baseload generation.

“Along the lines of ensuring energy security, the only choice we have today for baseload generation is coal, and we have got to secure supply for these coal plants,” he said.

State-owned PNOC-Exploration Corp. (PNOC-EC) plans to explore more coal mines in the country and forge partnership with coal mining firms abroad, Almendras said.

“We would like to promote coal exploration in the same breadth that we would like to promote geothermal exploration and upstream oil exploration. We are looking for energy supply security. We’re looking for ways in which we are going to have a lot more domestic component to the supply of energy. So, we are going to keep that there because we want to keep it going,” he said.

While the government has shelved plans to privatize PNOC-EC, Almendras said the decision to privatize its subsidiary PNOC-Coal Corp. would still hinge on the market.

If there’s somebody with a really good price for it, yes, we would. But in the interest of developing more coal resources, we would like to keep it going,” he said.

He also noted that if there would be opportunities for PNOC-EC to engage in joint venture activities on coal mining overseas, it would be a welcome development.

Last year, PNOC-EC said some foreign companies had approached them for possible tie-ups for oil and gas exploration projects in Thailand and Indonesia. The company said it had talks with Pearl Oil (Thailand) Ltd. and an Indonesia-based exploration firm to explore business overseas.

PNOC-EC’s shares of stock are 99.78 percent owned by the Philippine government through state-owned Philippine National Oil Co. (PNOC), its mother firm, with the remaining 0.22 percent held by public shareholders.

In its early years, PNOC-EC served mainly as a catalyst in petroleum exploration, focusing its activities in frontier onshore areas in Cagayan Valley, Central Luzon and Samar.

In 1994, PNOC-EC’s three-megawatt San Antonio gas power plant in Echague, Isabela was commissioned, providing electricity to more than 10,000 households. The operation of this plant made PNOC-EC the country’s first producer of indigenous natural gas.

Encouraged by its successes, PNOC-EC started to take bold moves in the 1990s by expanding its operations in the offshore areas of Northern Palawan, Ragay Gulf and offshore Mindoro. During this period, the company became either a lead operator or a partner in petroleum exploration joint ventures with local and foreign companies.

Also last year, PNOC-EC completed the engineering review of the Kuala Simpang Timor onshore block in North Sumatra. The exploration company has a coal mining business in Indonesia in order to ensure a stable and price-competitive supply of coal for the Philippine market.

In 2008, PNOC-EC signed a memorandum of agreement with Putra Asyano Mutiara Timur for the conduct of technical, legal and economic due diligence to determine the viability and commerciality of operating a coal mine project in the company’s concession area in Central Kalimantan, Indonesia.