DOE urges Malampaya consortium to auction additional gas within the year

MANILA, Philippines - The Department of Energy (DOE) has urged the Malampaya consortium to bid out the additional gas supply and purchase agreement within the year, the agency’s top official said.

“We’re bidding it out and we met with the Malampaya consortium already. They will determine the volume that is still available and they will bid it out,” Energy Secretary Jose Rene Almedras said.

He said they have already directed the consortium of Shell Philippines Exploration B.V. (Spex), Chevron and PNOC-Exploration Corp. to hold the auction of the additional gas at the Malampaya gas field.

“We want them to bid it out as soon as they can. They just have to determine how much more gas is there to offer. They should be able to determine the quantities since they have been studying it since the start of the year. And this is not new and we’ve been talking to them about this since last year,” he said.

He said several investors have already expressed interest to bid for the additional gas from Malampaya for their respective projects. “There are a few who want to build natural gas-fed generation facilities,” he said.

Almendras said the government is willing to sit down with the Malampaya consortium on the proposed royalties scheme for the additional gas.

“Proposals to lower the government royalties will have to be determined and to be discussed, or the government can use that to subsidize certain things,” he said.

For his part, Shell country chairman Edgar Chua said they may be able to come up with the exact volume of additional gas from the Malampaya project.

“I think that’s due for submission to the DOE before the end of June. That’s the latest timetable. It’s just reporting back to the DOE how much additional gas can be available,” Chua said.

On the other hand, First Gen Corp. president Francis Giles Puno said they have also been waiting for the government and the Malampaya group to bid out the additional gas.

First Gen earlier signified its interest to participate in the bidding as this will support its expansion plan.

“We understand the Malampaya consortium has to make certain investments to maintain and increase the capacity of the Malampaya gas field. Right now, we haven’t really ascertain if there’s more gas available. What we understand, so far the existing 2,700 megawatts of existing capacity is still available, but we’re not sure about the incremental capacity. We’ve been ready for San Gabriel four years ago, except that the San Gabriel is dependent upon the additional gas supply,” Puno said.

Spex and Chevron each own 45 percent of the Malampaya gas project while government-controlled PNOC-EC holds the remaining 10 percent.

The Malampaya gas project contains reserves of up to 3,000 MW. At present, only 2,700 MW is being used to power up three natural gas power plants namely, Sta. Rita, San Lorenzo and Ilijan power facilities in Batangas.

The remaining 300 MW was supposed to be taken up by the state-owned National Power Corp. (Napocor) for its San Gabriel project but this did not push through. The proposed facility is adjacent to the existing Sta. Rita and San Lorenzo natural gas power facilities.

The Malampaya consortium had earlier bared plans to invest $1 billion to bring to production the additional 300 MW and ensure reliability of production from the Malampaya gas field.

The Malampaya gas field is expected to produce until 2024 but the consortium is already readying plans to explore for more gas in its service contract in northwest Palawan.