THE consortium of the Malampaya deep water-to-gas project composed of the Philippine National Oil Company-Oil Exploration (PNOC EC), UC38, and Prime Energy yesterday appealed for the dissemination of facts to set the record straight in response to the banked gas claim being pursued by SMC Global Power unit South Premier Power Corporation (SPPC) that operates the 1,200-MW Ilijan power plant in Batangas province.
The consortium refuted SPPC’s claim and maintained there is no refusal to sell to Ilijan because there is no legal means by which the sale of gas to the plant can be made.
Last Dec. 4, SMC issued a statement saying that “currently, the Ilijan facility is on extended outage following the refusal of Shell Philippines Exploration BV (SPEX) to supply the 70 petajoules (PJ) in banked gas from Malampaya, that SPPC acquired from PNOC in June 2022. In the meantime, it is conducting repair works on the power plant to improve its fuel efficiency and generation ramp rate. The original gas supply agreement of the Ilijan Plant with Malampaya also expired last June 2022.”
To set the record straight, the consortium listed these facts vis-a-vis the SMC claim:
First, there is no live contract for the supply of gas from Malampaya between SPPC and SPEX, now Prime Energy. The Ilijan Gas Sale Purchase Agreement (GSPA) ended in June 2022; after more than 20 years of supply from Malampaya the GSPA expired in accordance with its terms.
Without a live contract, Malampaya gas cannot be sold legally to SPPC.
Second, diverting supply to Ilijan, which would be irregular and illegal without a contract, will deprive the other power producers with active contracts in the Luzon grid of natural gas.
Natural gas being used for the Luzon grid comes from the Malampaya field and is supplied to other power generators with live and approved contracts. The volume of gas from the Malampaya field, as everyone knows and as verified by the Department of Energy, is nearing maximum reserve drawdown, so the supply covered by Service Contract 38 needs to be fairly distributed.
Third, there is no basis to the claim that the Luzon power grid would be affected if the Ilijan power plant was not given priority in Malampaya’s banked gas allocation.
There is no additional power that would be generated by the unwarranted priority distribution of banked gas to Ilijan, operated by SPPC.
“If gas is supplied to Ilijan, the sum is the same. This will actually mean less supply to the other power plant-customers,” the consortium explained.
Diverting gas supply to Ilijan at this time would siphon off the supply from other power producers and worsen the power supply situation.
Supply for the Ilijan power plant is under consideration as additional gas volume is extracted, if possible, following the extension of SC38’s license. The claim of SPPC is disrupting this process and delaying the resolution that would have provided for a win-win solution for all players in the business value chain of Malampaya.
Finally, all bank gas that can be distributed is being distributed as per the contract terms. There is no such thing as bank gas stored that belongs to SPPC or anyone else. The consortium parties, which include government agencies, are diligently applying the terms of the contract and ensuring that all that can be done, within the terms of the contracts in place is done to produce gas and support power generation.
