DoE planning energy complex at Chevron site in Batangas

February 23, 2020 | 10:02 pm By Victor V. Saulon Sub-Editor

https://www.bworldonline.com/doe-planning-energy-complex-at-chevron-site-in-batangas/

THE Department of Energy (DoE) is looking at converting the property in Batangas being leased by the Philippine unit of Chevron Corp. into what its top official called an “energy city” which will house a liquefied natural gas (LNG) facility, among others.

“We wanted that (property) to become an energy area because we wanted to use that for an LNG terminal,” Energy Secretary Alfonso G. Cusi told reporters last week after an event at the agency’s main office in Taguig City.

He also downplayed any impact on petroleum supply should Chevron leave the area, which it uses as a facility for imported fuel.

“There’s no impact on our energy,” Mr. Cusi said. “What we want to do there with that place is to be (an) energy city,” he said.

He said there was supposed to be a draft executive order on the use of the property, but the issues that arose surrounding the lease contract between Chevron and state-led lessor National Development Co. (NDC) led to a further study of the proposed directive.

Mr. Cusi said the property had been previously considered by other entities, including the DoE-attached agency Philippine National Oil Co. (PNOC), as a site for an LNG import terminal. He said Lloyds Energy Group LLC also looked into the property.

Dubai-based Lloyds Energy said in November 2018 that it had submitted a letter of interest to PNOC to join in the selection of the state-owned agency’s joint venture partner to develop an LNG hub in Batangas.

Nothing came out of their discussions, but PNOC later partnered with Davao City businessman Dennis A. Uy for an LNG project called Tanglawan Philippine LNG, Inc. In late 2019, Tanglawan sought regulatory approval for the suspension of the venture, which the DoE approved.

Mr. Cusi should the handling of the property be “awarded” to the DoE to be used as an energy city, then the DoE will create a master plan for the project. He said he has to work with the Department of Finance to realize the plan.

“There is a process,” he said, adding that the intent is to maximize the use of the property, which is underutilized under Chevron.

In January, the DoF said the lease contract between NDC and privately owned Chevron Philippines, Inc. contains “onerous” provisions as the oil firm is paying lower-than-market rental fees on the site in San Pascual, Batangas.

Citing data from NDC, the DoF said Chevron has been paying a monthly rental fee of 74 centavos per square meter (sq.m.) on the 120-hectare or 1.2 million sq.m. property, significantly lower than the estimated fair market rental value of P17.90 per sq.m.

Finance Secretary Carlos G. Dominguez III, who is an NDC board member, described the deal as another “government contract with onerous provisions.” The DoF said the “sprawling” Batangas property is now valued at around P4.9 billion to P5.3 billion. Chevron Philippines is using the property as an oil import terminal, it said.

The Department of Trade and Industry (DTI) later said that the NDC board, which it chairs, has approved the dissolution by 2021 of Batangas Land Co., a joint venture formed by NDC and Chevron Philippines in the 1970s. The NDC board also approved the consolidation of ownership of BLC land in favor of the government.

Trade Secretary Ramon M. Lopez said the property will not be sold but repackaged through long-term leases or joint ventures.