Phoenix Petroleum in talks with PNOC for ‘strategic alliance’ on LNG hub

PHOENIX Petroleum Philippines, Inc. is in talks with Philippine National Oil Co. (PNOC) towards forging a “strategic alliance” with the state-led firm on its proposed liquefied natural gas (LNG) regasification terminal in Batangas province.

“The first engagement meeting between the two parties progressed last week, with the planned joint venture looking into the signing of the Memorandum of Understanding with PNOC in the coming weeks,” Phoenix Petroleum said in a statement on Thursday.

The statement follows the Energy department’s issuance of a “notice to proceed” to Phoenix Petroleum unit Tanglawan Philippine LNG, Inc. to develop the facility with CNOOC Gas and Power Group Co. Ltd., a subsidiary of China National Offshore Oil Corp. (CNOOC).

The company said representatives of Phoenix Petroleum, a Davao City-based independent oil company led by businessman Dennis A. Uy, and PNOC were in talks “in hopes to secure a strategic alliance.”

“With PNOC on board, Phoenix Petroleum has proposed their participation and involvement in the areas of pipeline infrastructure and franchise, banked gas, equity, and other marketing opportunities,” the listed company said.

Separately, PNOC President and Chief Executive Officer Reuben S. Lista confirmed meeting representatives of Phoenix Petroleum on Wednesday last week.

“They are inviting us to join the alliance,” Mr. Lista said in a phone interview.

He said the power plant component would be the next discussion point, along with PNOC’s banked gas and equity contribution to the project.

On its own, PNOC had initiated a similar plan to build an LNG hub, which was among the projects put forward by Energy Secretary Alfonso G. Cusi to ensure energy sufficiency and security.

Last month, the company terminated its selection of a joint venture partner for its proposed LNG hub, formally ending its ambition to spearhead what could have been a state-led facility for the imported fuel.

Five gas-fired power plants in Batangas, with a combined capacity of 3,211 megawatts (MW), are the main customers of the Malampaya gas discovery. The offshore Palawan project is expected to start depleting by 2022 to 2024.

Since its inception in 2001, the gas-to-power project has been providing a stable supply of energy, meeting 35% to 40% of Luzon’s power needs, the Department of Energy previously said.

PNOC has a share in the Malampaya gas find which is “banked” and up for monetization after several negotiations with prospective buyers failed. Its unit PNOC-Exploration Corp. is a partner in the project along with private companies.

“I think we will have a partnership. We will have a part in the partnership,” Mr. Lista said.

“Tumatawad lang kami. May mga offer na sila (We’re just bargaining. They have already made offers),” he said, adding that he considers the discussions towards a partnership as “99%” complete.

In its statement, Phoenix Petroleum said the Tanglawan project is expected to break ground this year on its regasification and receiving terminal with a capacity of 2.2 metric tons per annum (mtpa).

Imported natural gas is liquefied for ease of shipping, then regasified or reverted to its former state in the country of destination.

“The facility will help support the demand for a clean, competitive, and environment-friendly energy source in Luzon. The LNG hub project aims to provide energy security for the country,” Phoenix Petroleum said.

It targets commercial operation of the facility by 2023, while also aiming to develop a gas-fired power generation facility with an installed capacity of up to 2,000 MW.

Mr. Lista declined to confirm whether other entities, including CNOOC and PXP Energy Corp., were part of the discussions last week.

In October last year, Phoenix Petroleum granted preferential rights to PXP Energy to participate and acquire up to a 49% equity in the former’s LNG project under the Tanglawan entity.

PXP Energy also announced that Mr. Uy’s Dennison Holdings Corp. would subscribe to 340 million shares in the listed company at a discounted price of P11.85 per share for a total P4.03 billion.

PXP President Daniel P. Carlos did not immediately respond to a request for comment on the talks between Phoenix Petroleum and PNOC.

Phoenix Petroleum has yet to disclose the final investment cost of the LNG hub, but earlier this month its board authorized the company to invest corporate funds initially at P250 million for the project.

On Thursday, its shares closed 0.88% higher at P11.40 each.