PNOC plans to ‘equitize’ banked gas in LNG tie-up deal

Published April 25, 2017, 10:00 PM By Myrna M. Velasco

http://business.mb.com.ph/2017/04/25/pnoc-plans-to-equitize-banked-gas-in-lng-tie-up-deal/

State-run Philippine National Oil Company (PNOC) is contemplating to convert into equity its “banked gas”that may be utilized in the next chain of infrastructure investments for the gas sector – including a liquefied natural gas (LNG) import terminal and offtaker gas-fired power projects.

PNOC President Reuben S. Lista said it will be one of the major bargaining chips they will have with prospective partners in the planned LNG ventures.

The company previously penciled in potential proceeds of P29 billion-P30 billion for its banked gas sale. And in the process of tapping partners for the proposed LNG facilities, Lista said they have been planning to equitize it.

The chief executive of the state-owned company said that could redound to 40 percent equity share in the project company of the LNG ventures – if the upper cost of investment would be at $2.4 billion. Definitely, he stressed, PNOC will negotiate for equity that will not put the government at a losing end.

The company previously said it has 98 gigajoules (GJ) of banked gas that it can draw from the Malampaya field’s production – and that would be good to fuel a power plant of 200-megawatt capacity over the short- to medium-term.

Lista indicated of the 34 interested parties in the blueprinted LNG projects, he is expecting at least four to six groups likely ending up as “the real serious investors” – and that entails “separating the real men from the boys.”

Among those reportedly pursuing LNG investment deal with keen interest include a Spanish firm, a consortium of Indonesian-Turkish-Omani investors, a Singaporean firm; Japanese and Chinese investors; and local firms like First Gen Corporation.

Based on initial discussions with the interested parties, Lista noted that the preference would be a combination of floating regasification and storage unit (FSRU) and eventually an onshore terminal – and the capacity shall be of scale that could meet the country’s gas needs post-Malampaya.

On any greenfield power plant that must be initiated by government, Lista said the proclivity is for a generating facility with 600 to 700 megawatts of installed capacity.

“That’s the scale that will make it viable,” he said, adding that the government is by far inclined to change its position on an earlier planned 200MW capacity.

Lista emphasized though that part of the market they want to cater to would be the industrial zones as well as some areas that have marginal energy access, including the off-grid areas served by the Small Power Utilities Group of the National Power Corporation.