Sale of Malampaya banked gas in final stages of negotiations

MANILA, Philippines - The operators of the Malampaya deep water gas-to-power project in offshore Palawan are finalizing negotiations for the so-called banked gas to meet the requirements of natural gas plants.

“We’re working with the government, we are still making sure that we will be able to monetize it, to bring it to the power plants,” Shell Philippines Exploration B.V. (SPEX) managing director Sebastian Quinones said.

The Malampaya consortium consists of SPEX, the upstream oil company of Shell; Philippine National Oil Co.-Exploration Corp. (PNOC-EC); and Chevron Malampaya LLC.

Quinones said the consortium is in talks with several bidders for the sale of the banked gas.

“We’re negotiating with a few bidders but I am not allowed to say,” he said.

The consortium hopes to finish negotiations soon to be able to meet the requirements of the natural gas plants that will soon start operating.

“Malampaya, because of completing Phase 2 and 3, we are technically capable of producing the gas required by the industry. We’re okay until the end of contract,” he said.

“We are aware that San Gabriel and Avion are just nearly completed. They are already going hot commissioning, we are sure there will be discussions on how to get gas to fire those new power plants,” Quinones added.

The 414-megawatt (MW) San Gabriel and 97-MW Avion natural gas plants are projects of First Gen Corp. of the Lopez group.

Originally, the government designated the banked gas as reserves for future use, particularly by the 1,200-MW Ilijan natural gas plant in Batangas, when the Malampaya gas supply runs out by 2024.

However, the government decided to sell the banked gas to power generation companies to augment power supply and avoid electricity shortage.

In April 2015, the government and Malampaya consortium announced the tendering of their respective gas volume entitlements under Service Contract 38.