Coal-linked pricing for PH gas eyed

Updated May 14, 2018, 3:15 PM By Myrna M. Velasco

https://business.mb.com.ph/2018/05/13/coal-linked-pricing-for-ph-gas-eyed/

Players in the domestic gas market are eyeing a pricing index that will be linked to coal prices – and for them to possibly institutionalize a Philippine gas pricing index like what other markets in Asia have already done.

“If we can link our gas price to coal and we can come up with competitive product, then that becomes compelling to our consumers,” First Gen President and Chief Operating Officer Francis Giles B. Puno has stated.

First Gen is the leading gas industry player in the country, having four power plants now operating on that technology. Since gas pricing emerges a recurring dilemma for the sector versus the deemed cheaper coal-fed facilities, Puno noted that their goal is to come up with a coal-linked pricing for the gas sector.

The First Gen executive acknowledged that gas prices globally have grown too fragmented, but he qualified this is “in a positive sense,” while explaining that “it used to be linked just one way – so we’re looking at various pricing mechanisms and we’re still hoping that there would still be pricing mechanism that will link our gas fuel to coal.”

If the Lopez firm thrives on its planned $1.0 billion liquefied natural gas (LNG) onshore import terminal, it is highly likely that it also becomes a gas supply aggregator for other players in the country, hence, it is very essential for it to address the issue of pricing.

“Our focus is also for Ilijan plant – because the motivation for that is when we develop the LNG terminal, that we’re delivering gas not only to our assets but also to other assets including Ilijan. That way, we can lower the rates for the consumers,” Puno stressed.

He added “our objective is to bring down that electricity cost so it’s compelling for the market to contract with low carbon sources like natural gas rather than coal.”

Conversely, the Department of Energy (DOE) has indicated that it is studying potential gas pricing benchmarked on Singapore Sling index as well as other regional and global indices, such as Henry Hub and the Dutch TTF gas futures.