Friday, March 17, 2017

LNG project offers flood PNOC

Posted on March 17, 2017

STATE-OWNED Philippine National Oil Co. (PNOC) has received unsolicited proposals from 26 groups -- three Filipinos and 23 foreigners -- for its plan to put up a liquefied natural gas (LNG) facility in the country that can house a power plant as well as stations for storage, liquefaction and regasification, its president said.
“[The facility will be] operational by 2019... ‘yan ang aming [that’s our] optimistic dream,” Reuben S. Lista, PNOC president and chief executive officer, told reporters in a briefing at the company’s main office in Taguig City.

“Our pessimistic dream is 2020,” he said, keeping the project’s completion date within the present administration.

He gave a breakdown of the proposals as three from Singapore, two from Korea, seven from China, six from Japan, two from Turkey, and one each from the United Arab Emirates, Spain and Australia.

Meron pang isang papasok... Spain din ata (There’s one more coming in... possibly from Spain).”

He declined to name the companies because of a non-disclosure agreement with them, but said a technical working group had been formed to evaluate the offers.

In the past, First Gen Corp., Phinma Energy Corp. and Shell companies in the Philippines had expressed plans to put up an LNG facility. First Gen had even offered 40% of its proposed $1-billion LNG regasification terminal in Batangas to prospective investors. The company has several plants running on natural gas, mostly sourced from the Malampaya gas find.

Mr. Lista declined to confirm if those with plans to put up an LNG facility had submitted proposals.

“I know this will work because this is necessary,” Mr. Lista said of the envisioned integrated LNG facility.

Utos sa amin ng secretary ito (This was the order to us by the secretary),” he said, referring to Energy Secretary Alfonso G. Cusi.

“We will not do this without the direction of the secretary.”

Mr. Cusi, who chairs PNOC, has been saying that one of his plans was to build an LNG facility for the country to ensure energy security and to bring down power rates. He said the project would be led by PNOC, the Department of Energy’s (DoE) attached commercial entity.

PNOC, the DoE’s commercial arm, has in past years been earning from rental income over a vast land bank, some of which are being rented by Petron Corp., a former subsidiary that was sold to the private sector in 1993.

Glenda G. Martinez, PNOC senior vice-president for management services, said the company earned P236 million in 2015, mostly from rental income and interest earnings from funds parked in banks. She estimated the company’s landholdings to be at least 900 hectares.

Mr. Lista said he expects some of the proponents to group together to come up with a single proposal for an integrated project.

He placed the submission of final proposals by end-April, adding he expects offers be reduced to “maybe seven,” after which the PNOC working group will draw up a short list.

Mr. Lista said the integrated LNG facility project could be expanded to include natural gas distribution to power plants or gas stations to benefit vehicles that run on compressed natural gas.

Imported natural gas is liquefied for ease of shipping, then regasified or reverted to its former state in the country of destination. The project was floated partly in preparation for the depletion of Malampaya reserves which is expected in 2024, at the earliest, although the consortium that operates the gas platform sought its license to be extended to 2028-2029.

Mr. Lista said proponents should have determined the commercial viability of the facility, its benefit to the country, how PNOC will earn from the project, the project’s viable years and its connectivity to other government projects. He also said the proposals should show how the project could bring down electricity cost.

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