PNOC eyes LNG supply to PEZA locators

Published November 27, 2016, 10:01 PM By Myrna M. Velasco

http://business.mb.com.ph/2016/11/27/pnoc-eyes-lng-supply-to-peza-locators/

State-run Philippine National Oil Company (PNOC) is targeting locators of the Philippine Economic Zone Authority (PEZA) as major market for its  proposed 200-megawatt liquefied natural gas (LNG) power facility.

Energy Secretary Alfonso G. Cusi said his mandate to newly appointed PNOC President Reuben Lista is to explore ways how to make gas-fired facilities become cheaper source of electricity, primarily for investors in the ecozones.

He said the use of ‘banked gas” is among those being studied. Onward, the government is also sorting out plans on how it can make LNG more affordable to the wider base of Filipino consumers.

“That is the mandate I have given to Admiral Lista, because we cannot ask the private power operators to just bring down power costs…so the government has to find ways so we can attract investors…our target are the industries,” Cusi said. The proposed LNG plant is targeted for commercial operation by 2018.

He added that the ‘utilization of the banked gas’ would be among the options, because that had been procured at substantially reduced cost then from state-run National Power Corporation (NPC) out of its gas sale and purchase agreement (GSPA) for the Ilijan plant.

The PNOC-held ‘banked gas’ was originally planned to be auctioned to private parties for greenfield gas-fired power projects, but it seems the current administration has its own plan of using it via a PNOC-sponsored power project. PNOC insiders previously indicated that the utilization of the ‘banked gas’ would allow government to offer power supply at cheaper rate, because the fuel had been sourced at half-the-price in 2009 on a government-to-government transaction.

The state-owned PNOC gained ownership of the ‘banked gas’ from the Malampaya project after purchasing it from the government, through the Department of Energy (DOE), for R14.4 billion or just half from its original estimated value of R29.5 billion.

Technical experts noted that the volume of the banked gas, if sold to a third party, would be able to run a power plant for some years while waiting for the longer-term investments on LNG facilities or when the country discovers additional commercial gas from the Malampaya or other fields.