Government to build $200-million gas pipeline

MANILA, Philippines - The government, through a new pipeline management firm, has decided to own and operate the first phase of planned gas pipeline from Batangas to Manila that will cost up to $200 million.

Philippine National Oil Co. (PNOC)-Pipeline Corp., will spearhead the country’s $2.1 billion push for a liquefied natural gas (LNG) development program.

“We have a master plan for natural gas where we will build Batangas to Manila pipeline. From our initial studies, we want (PNOC Pipeline Corp.) to own and operate it,” Energy Undersecretary Jose M. Layug, Jr. said.

Layug said that “if it is owned by the government, we have considerations other than profit. One is to ensure lower cost of electricity and fair and open access of gas to all interested parties.”

In a study, the Department of Energy (DOE) found out that most pipelines are owned and operated by governments to prevent private sector monopoly.

Layug said the government will bid out the engineering, procurement and construction works and also the technical and maintenance agreement in the first quarter next year.

To date, DOE is laying down the rules and the terms of reference for the bidding of the $120-200-million pipeline, Layug said.

The Philippine government has been wanting to put up a gas pipeline from Batangas all the way to Subic in Zambales. The first part of this project is the Batangas-Manila gas pipeline.

The DOE is also planning to build an integrated Bataan LNG terminal and several LNG-fired power plants.

“Phase 2 will involve the construction of LNG receiving terminals whether onshore or offshore and the development of the industrial market for natural gas,” Layug said.

Phase 2 will start two years after the start of operations of the pipeline. The Batangas to Manila pipeline’s construction will need three years, Layug said.

The LNG receiving terminal will handle imported LNG that will be distributed to industrial consumers through the pipeline.

“Initially, we would get the remaining gas from Malampaya,” Layug said.

Putting up these vital energy infrastructures will expand the use of natural gas beyond the power sector, making environment friendly, competitively priced and efficient fuel available to the industrial, commercial and transport sectors, and eventually to the households, the DOE earlier said.

“The last phase of the master plan will involve putting up power plants running on gas which would serve as the anchor load for the pipeline,” Layug said, adding that it will be a 600-megawatt (MW) power plant.

Other phases in the $2.1-billion natural gas master plan will be owned and managed by the private sector, Layug said.