By Lenie Lectura - November 13, 2019
UPSTREAM oil and gas company PXP
Energy Corp. (PXP) has formalized its intent to participate in the LNG
(liquefied natural gas) sector.
Pangilinan-led PXP said on Tuesday
it submitted last Monday an unsolicited proposal to the Department of Energy
(DOE) for the strategic development and utilization of an Integrated Gas Hub in
Malampaya upon the expiry of Service Contract 38 (SC 38) in 2024.
PXP said the use of the Malampaya
facilities as the Integrated Gas Hub will support the development of a
robust indigenous gas industry. This, it added, is consistent with
DOE’s commitment to pursue national development through the twofold agenda of
attaining energy independence and implementing power market reforms as
contained in the Philippine Energy Plan, and is aligned with the DOE’s clean
fuel strategy, including the reduction of dependence on coal.
The unsolicited proposal is also
seen to yield substantial foreign-exchange savings resulting from the reduced
importation of coal and other fuel supply, added PXP.
When sought for comment,
Energy Secretary Alfonso Cusi said he needs to carefully study the
proposal. “I can’t say anything yet. I need to study it first. I’m waiting for
the report of my staff and PNOC-EC [Philippine National Oil
Co.-Exploration Corp.] management,” he said in a text message.
SC 38 covers the Malampaya
gas-to-power project, which is being undertaken by the Malampaya
consortium.
It is developed and operated by
SPEx (Shell Philippines Exploration BV) with a 45-percent stake on behalf of
joint-venture partners Chevron Malampaya Llc.,also with a 45-percent stake and
PNOC-EC, which holds the remaining 10 percent.
PXP has also expressed an interest
to acquire the 45-percent ownership of Chevron Malampaya Llc. in SC 38 through
the right to match of the other SC 38 consortium members.
SC 38 will expire in
2024. SPEx wants the contract extended but the DOE has yet to
grant the request.
When asked how the possible entry of
Pangilinan’s group will affect the consortium’s plans moving forward, SPEx
said, “We cannot comment because we are not privy to details on whatever is
happening among MVP [Manuel V. Pangilinan], Chevron and other parties.”
However, SPEx confirmed that it
received advice from Chevron on its decision to sell its interest in the
Malampaya gas project. “We are discussing the matter with Chevron,” an official
from SPEx said.
“Our focus remains on operating the
Malampaya natural gas facilities safely, reliably and efficiently to ensure we
keep powering the Philippines with cleaner-burning, domestic natural gas,”
added the official when sought for comment.
The gas facility supplies 40 percent
of Luzon’s power requirements and 30 percent nationwide.
The gas facility fuels the following
gas plants: the 1,000-megawatt Santa Rita, the 500-MW San Lorenzo, the 1,200-MW
Ilijan, the 97-MW Avion and the 414-MW San Gabriel.
SPEx had said the Malampaya gas
reserves could last up to 2027 or up to 2029, depending on the demand.
PXP said the Malampaya
infrastructure and distribution network, strategically positioned in the West
Philippine Sea, is envisioned to support the continued development of the
Malampaya resources, as well as the economic development of Sampaguita Field
and other nearby prospects under SC 72, which is operated by PXP through Forum
(GSEC 101) Ltd.
PXP Energy holds a 78.98-percent
operating interest in SC 72 or the contract to explore Recto Bank in the West
Philippine Sea through London-listed Forum Energy Plc. It also has a direct
operating interest of 50 percent in SC 75 northwest Palawan. It is
also waiting for guidance from the Philippine government in respect
of any future activity in the SCs.
“PXP, through Forum Energy Ltd.,
will take guidance from the Philippine government in respect of any future
activity in SC 72 and SC 75. The company is mindful that the Malampaya gas
resource, which supplies about 40 percent of Luzon’s power requirements, could
be exhausted within the next decade.
The company, therefore, remains
hopeful that the force majeure imposed on SC 72 and SC 75 will be lifted by the
Department of Energy soon for the company to be able to resume exploration
works in these SCs,” it said earlier.
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