SPEX can only commit additional gas until 2024
From Malampaya
The new gas volume set on tender along with the government-owned ‘banked gas’ can only be committed for a contractual arrangement until 2024 – the lapse of the original Service Contract (SC) 38 that field developer Shell Philippines Exploration B.V. (SPEX) has with the Philippine government.
SPEX Managing Director Sebastian Quinones has indicated this to the media, although he tipped off that there could actually be more gas that can still be extracted from the field beyond that timeframe.
He noted that fresh round of drilling may yield additional gas that could bring the country’s energy independence on to longer duration.
“I can’t say anything beyond our license…but the hope is that we would still be able to find additional reservoir… but operating beyond our contract in 2024 will depend on the fiscal regimes that will be set by the government,” Quinones said.
The Malampaya consortium, nevertheless, has been playing its cards closer to its chest given that their bid for license extension is still languishing in government’s decision-making terrain.
“We can only commit additional gas within the duration of our contract which is 2024,” Quinones said, when asked how long the ‘volume-on-bidding’ could last in fueling off-takers, like the power plants.
He added “we are contractors providing service to the country – (the government) may not want us to operate later on,” – apparently referring to the possibility that the Malampaya field may already be offered to other parties post-2024.
A volume for mid-merit power plant of 400MW ca-
pacity has been scheduled for auction, with the Malampaya field consortium assuring that this is the scale of gas that they could make available before the end of this year.
The gas purchaser or off-takers, Quinones said, shall be chosen depending on the volume that they would need or on the scale of capacity of their power project. Pricing will have to be anchored on prevailing commercial terms.
Despite the government’s hard-sell efforts to expand the market potential of gas to other sectors like transport and industrial users, the discernible winner on that plain would still be the power generation facilities.
A joint tender of the banked gas held by the Philippine National Oil Company (PNOC) and the additional volume that can be extracted by SPEX had been decided for a tender that could be of viable scale when offered to investors.
The ‘banked gas’ was mainly drawn from the unused capacity of the 1,200megawatt Ilijan plant since 2001 when Luzon grid was teeming with supply and the plant’s injection of capacity to the Luzon grid was hurdled by transmission constraint dilemmas.