Malampaya ‘banked gas’ receives $800-million purchase offer

Aforeign company has reportedly offered to buy for $700 million to $800 million, approximately R35 billion to R40 billion, the remaining 97.67 petajoules (PJ) of Malampaya ‘banked gas’ that is currently under the charge of state-run Philippine National Oil Company (PNOC).

As noted by PNOC President Reuben S. Lista, the offer is “highly attractive,” but the company is still hurdled on the exact timeframe on when the gas can actually be extracted from the Malampaya field. For the meantime, he kept under wraps the identity of the prospective buyer.

There had also been ‘purchase proposition’ from a local company, but the price tender of $4.50 per million British thermal unit (BTU) equivalent is way below the government’s quoted sale price of $6.616/MMBTU, as referenced on the gas sale cost to the Ilijan plant.

The ‘banked gas’ had been primordially contracted for the 1,200-megawatt Ilijan power facility, but due to ‘dispatch constraint’ at the initial years of its operations, the plant was not able to fully utilize its fuel allocation for several years.

That led to the ‘banked gas’ accumulation – that was then subsequently booked as “stored fuel’ in the financial books of state-run National Power Corporation (NPC), the government entity that had underwritten the gas sale and purchase agreement (GSPA) for the Ilijan plant.

Nevertheless, under the Arroyo administration, a government-to-government transaction was consummated leading to NPC’s sale of the ‘banked gas’ to PNOC for just half of the asset’s value – or from R35 billion to R14.4 billion.

Lista said they made initial divestments of the ‘banked gas’ to Power Sector Assets and Liabilities Management Corporation (PSALM) for R937,000; and another R2.3 billion worth to Shell Philippines, hence, the aggregate volume had already been down to 96.67PJ from 108 petajoules.