PNOC pushes negotiations for banked gas

MANILA, Philippines — State-run Philippine National Oil Co. (PNOC) is seeking clearance from its board to negotiate for banked gas after two failed biddings, its top official said.

In the first two biddings, PNOC president Reuben Lista said bids were non-compliant since offers made were below the Ilijan price of $6.616 per gigajoules, the peg price of the banked gas.

“We will now go to the board and submit the recommendation and deadlines and how to negotiate,” he said.

The PNOC management has formally written the PNOC board, seeking authorization to enter into comprehensive negotiations for the banked gas below the Ilijan price.

Under the proposal, the PNOC management is pushing for another round of publication without setting a specific deadline for submission of offers.

It said this would allow “multiple offers to come in” until it receives the most advantageous offer to government.

Lista said they are not in a hurry to sell the banked gas since there are a lot of options for the asset.

The government is eyeing a liquefied natural gas (LNG) terminal to be built by 2022, where the banked gas can be sold.

“The country is planning an LNG hub, so we can sell the banked gas to the terminal,” Lista said.

The PNOC official also said the gas sales and purchase agreement (GSPA) of the 1,200-megawatt (MW) Ilijan power plant is expiring in 2022, meaning it would need fuel to run.

Morever, according to PNOC-Exploration Corp. (PNOC-EC), the Malampaya gas project could still supply gas beyond its end of contract in 2024.

“PNOC-EC is saying there is still gas until 2027, 2030,” Lista said, however, negotiations for the extension of contract would still be needed.

“I requested the Energy Secretary that PNOC should be included[in the negotiations…There’s the possibility na PNOC-EC or PNOC mother might be asked to look for a sub-contractor or operations and maintenance (O&M),” the PNOC chief said.

The state-run firm is selling its banked gas amounting to 97.67 petajoules.

The banked gas – which was paid by government for future use – is stored in the reservoir of the Malampaya deepwater gas-to-power project offshore Palawan owned by PNOC.

Originally, it was designated for the future requirements of the 1,200-megawatt (MW) Ilijan power plant and the five First Gen power plants with existing gas sales and purchase agreements (GSPAs), when the Malampaya service contract ends in 2024.