September 2, 2018 |
9:01 pm
By Victor V. Saulon, Sub-Editor
THE Energy department
and the Senate energy committee will draft a law covering the natural gas
industry in preparation for a “critical” period next year when an integrated
liquefied natural gas (LNG) facility should have started construction in
preparation for the depletion of the country’s sole domestic source of the
fossil fuel.
However, the Senate
panel continues to have doubts about a provision that will allow the Department
of Energy (DoE) to step in and initiate the project. For its part, the DoE has
yet to agree to a counter-proposal that calls for it to formulate an energy mix
that favors natural gas.
“We’ve been working
closely with Senator [Sherwin T.] Gatchalian, the chairman of the [Senate]
Committee on Energy. We’re currently talking about advocating the passage of a
natural gas law wherein some of the salient points would be to address those
concerns regarding the construction or the establishment of an LNG regas[ification]
facility in the interim,” Leonido J. Pulido III, assistant secretary at the
DoE, told reporters.
Separately, Mr.
Gatchalian confirmed that his office is in the process of working with the DoE
on a comprehensive LNG law, which will become “the ultimate framework of the
LNG industry.”
“We want to make sure
that the future of LNG will be viable and sustainable. We will have a framework
to regulate the importation of LNG, the terminal activities of LNG, and also
the liquefaction of LNG,” he said.
Imported natural gas is
liquefied for ease of shipping, then regasified or reverted to its former state
in the country of destination.
“Most of this is
midstream,” he said, referring to the importation and trading section of the
LNG value chain. He said the downstream or the exploration part will be
discussed later.
Mr. Gatchalian said his
counter-proposal to the DoE’s stand to undertake the project is to strengthen
the DoE’s power to dictate the energy mix, which the industry must follow.
“Now, the market will
be dictated and guided by the energy mix so instead of government spending
taxpayers’ money on the project, you are actually creating space for the
investors to come in,” he said.
He previously expressed
doubts about the government, in general, entering in a business venture given
past instances of corporate mismanagement and inefficiency.
Mr. Gatchalian said
when the government enters a business and spends money for it, the risks are
high, especially if it fails to make money or worse, if it loses taxpayers
money.
“Hopefully, within six
months the framework will be completed. It will take time,” Mr. Gatchalian
said.
Mr. Pulido said about
13 companies have signified their intention to build an integrated LNG facility
but none has so far submitted a formal proposal.
He said the biggest
challenge is the size of the investment required to fund the project — around
$300 million to $400 million if the facility is a floating storage
regasification unit, or FSRU, and about $1 billion if it is onshore.
However, lenders will
need assurance that the imported fuel will have a ready market, he said. Five
gas-fired power plants in Batangas province, with a combined capacity of 3,211
megawatts, are the main customers of the Malampaya gas find. The offshore
Palawan project is expected to be depleted by 2022 to 2024.
The five plants sell
their power to Manila Electric Co. under different power supply agreements, one
of which has already expired. The rest will lapse in 2022, 2024 and 2027, Mr.
Pulido said.
He said lenders would
want to see off-take agreements that are valid for 15 to 20 years.
“It is such an issue.
We need to fix that as early as now so that these investors can get the
financing they need,” he said.
He said a provision
that would allow the DoE to come in and nominate one of its commercial arms to
undertake the project either under a public-private partnership or a
build-operate transfer scheme would ensure the continuity of the LNG facility.
“We think that the
critical period would be middle to late 2019,” he said, given the length of
time to build the facility.
No comments:
Post a Comment