New plant eyed to ease power crunch

Riza T. Olchondra
Philippine Daily Inquirer
2:39 AM | Monday, November 17th, 2014

Japanese conglomerate Marubeni Corp., which is expanding its Philippine portfolio, has offered to build a new gas-fired power plant to ease electricity outage concerns in 2015.

Energy Secretary Carlos Jericho L. Petilla said Marubeni proposed to put up 54 megawatts (MW) of initial capacity by next summer “at no cost to the government” if it could get a good price for the banked gas that the state wanted to monetize.

“They said they can put up as much as 200 MW,” Petilla said. Initial talks have not yet led to firm commitments, Petilla noted, but Marubeni was considering building the facility beside the 1,200-MW Ilijan gas-fired power plant that it helped build (under a Japanese-Korean consortium) in Batangas.

Banked gas from Philippine National Oil Co. (PNOC) and Shell Philippines Exploration B.V. (Spex), which operates the Malampaya gas platform, may be auctioned as early as next month or January 2015. The total volume of banked gas may be able to run a 400-MW power plant until 2024, according to DOE data.

However, Petilla said several hurdles had to be addressed. One constraint is that PNOC’s share of the banked gas must be auctioned under current rules, which means the DOE may have to refer Marubeni to Spex for its extra gas.

Another is that the banked gas can only be extracted by end-2015 after pressure in the Malampaya gas wells have normalized from expansion work (through a new platform installation) in March 2015. Spex managing director Sebastian Quiniones said in an interview that the banked gas might be awarded in early 2015 but physically delivered only by 2016.

A third constraint, Petilla said, was whether Marubeni would willingly “take a hit” financially in the initial operating stage by using more expensive diesel fuel until the banked gas has become available.

Marubeni, though Marubeni Philippines Corp., has various interests in the Philippines ranging from general merchandise to power. Its IPP portfolio in the Philippines makes up more than 10 percent of its global footprint in the power sector. Presently, Marubeni and Tokyo Electric Power Co. (Tepco), through joint venture firm TeaM Energy Corp., are building a third unit of the Pagbilao coal-fired power plant in Quezon province in partnership with Aboitiz Power Corp. The generation capacity is 388 MW and commercial operation is scheduled to start in November 2017.

In its website, Marubeni Philippines said its focus was now on the construction of new merchant plants and was keen in expansion projects of existing power plants and participation in the growing gas industry and gas power development in the near future.

The price of the banked gas might be benchmarked with the price of Malampaya gas, which is sold to Ilijan and other gas-fired power plants, Petilla said. Scouring for short-term power supply, Petilla said he would prefer that the banked gas be sold through bidding to new power plants opened by the summer of 2015. Besides pushing for new power plants, the DOE has been helping Manila Electric Co. (Meralco) sign up big energy users with generators to help prevent power outages in Metro Manila, which contributes roughly a third of the Philippines’ economic output.

In December 1997, the state-owned National Power Corp. (Napocor) contracted and paid for minimum allocations of natural gas from Malampaya for the Ilijan power plant. However, lower-than-projected demand for electricity in the wake of the Asian financial crisis (1997-1998) and delays in power transmission projects left the stockpiled gas unused.

Due to the recent deregulation of the energy sector, ownership of the gas inventory has changed hands from Napocor to the Power Sector Assets and Liabilities Management Corp. (a state firm tasked to privatize Napocor’s assets) and to the DOE. source