Banked Malampaya gas up for bidding

MANILA, Philippines — State-run Philippine National Oil Co. (PNOC) is selling its unused Malampaya gas called banked gas through a public bidding.

In a notice, PNOC said interested parties may submit offers to buy its banked gas comprising of 97.67 petajoules.

Bidders are given until July 23 to submit their proposals, which should contain price offer in US dollar per gigajoule exclusive of taxes, volume in petajoules, schedule of withdrawal and description of intended use.

PNOC said those with acceptable offers will be required to submit qualification documents to establish their legal, technical and financial eligibility.

“PNOC at its sole discretion, reserves the right to accept or reject any or all offers to buy the banked gas,” it said.

The banked gas—which was paid by government for future use—is stored in the reservoir of the Malampaya deepwater gas-to-power project offshore Palawan owned by PNOC.

Originally, it was designated for the future requirements of the 1,200-megawatt (MW) Ilijan power plant and the five First Gen power plants with existing gas sales and purchase agreements (GSPAs), when the Malampaya service contract ends in 2024.

However, the government decided to sell the banked gas to power generation companies to augment power supply and avoid electricity shortage.

In April 2015, the government and Malampaya consortium—composed of Shell Philippines Exploration B.V. (SPEX), Chevron Malampaya LLC and PNOC-Exploration Corp.—announced the tender of their respective gas volume entitlements under Service Contract 38.

The banked gas involves up to 227.995 petajoules and average daily quantity of up to 78.1 petajoules per day, available for delivery as of Jan. 1, 2016 and up to Feb. 23, 2024.

In 2017, PNOC again planned to sell its banked gas, with value estimated at $650 million, to use as forward equity in the government’s liquefied natural gas (LNG) hub.

It laid down two options, the first is to trade the banked gas outside the country while the second is to extract the banked gas and burn then sell it in the form of electricity. However, none of the options have materialized yet.

Energy Secretary Alfonso Cusi wants to put up an integrated LNG hub with storage, liquefaction, regassification and distribution facility, as well as a reserve initial power plant capacity of 200 MW.

Targeted to be completed in 2020, the project is being eyed to help meet the requirements of gas-fired power plants supplied by Malampaya and make the country an LNG hub in Asia.