Cusi directs PNOC to get ‘best price’ for Malampaya gas

Energy Secretary Alfonso G. Cusi has directed state-run Philippine National Oil Company (PNOC) to fetch “the best price” that will be beneficial to the government when it negotiates with prospective buyers of its Malampayaextracted banked gas.

“PNOC will have to look for the best price possible…what is the best price that we can sell it at prevailing market conditions, so they’re looking at that rather than waiting,” the energy chief said.

The state-run firm indicated that it will first bring to the table the Ilijan gas price of $6.616 per gigajoule, then a compromise may be reached with the buyer if the price will not shortchange government in terms of proceeds target.

“PNOC officials have to look at it with a balanced mind, what are the technical and commercial considerations to it,” the energy chief said.

In the past, Cusi noted that the banked gas never made it to the divestment direction that PNOC opted “because of the price cap,” which is the Ilijan benchmark price.

Nevertheless, the energy chief said it is about time the government decides on it so the gas can be utilized to generate electricity – at a cost also that shall be beneficial to the consumers.

“Previous management set a cap, so it was never sold. Our fear is: we might be losing opportunity in selling it, so PNOC has to look at its options,” Cusi stressed.

When numbers were previously crunched, PNOC was looking at proceeds ranging from $700 million to $750 million, if reckoned on the Ilijan price, but if the sale cost per gigajoule goes lower, the level of proceeds will also be decimated.

PNOC said the prevailing price of liquefied natural gas in the Asian market is at $9.47 per gigajoule, so it deems that the Ilijan price is still lower than what a gas off-taker can source from the market.

If the targeted negotiations will still not yield favorable outcome, PNOC said it can still wait for some years and eventually offer it to new power plant project off-takers.