LOPEZ-LED First Gen Corp. said its offer to buy the government’s banked gas at $3.48 per gigajoules could result in savings for electricity users of close to P0.60 per kilowatt-hour (kWh)or a total of around P10 billion for the period starting next month and early 2024, the year when the Malampaya gas-to-power contract ends.
Jerome H. Cainglet, First Gen vice-president and head of the gas business unit, said his “rough estimate” of savings is the difference between the price the company offered to buy the 97.67 petajoules banked gas owned by state-led Philippine National Oil Co. (PNOC), and the price contracted by the 1,200 megawatt (MW) Ilijan power plant.
“[A consumer using] 500-kWh per month would mean mga (around) P350 per month ang matitipid (will be saved),” he said.
He qualified that the figure represents only the electricity sold by the company. Distribution utilities source energy from different sources, including the power produced by gas-fired plants like those owned by First Gen.
“Sa mga regular, ’yung mga malilit na consumers na 200 kWh per month it would equate to around P140 per month na mababawas sa binabayad nila,” he said.
(For regular or small consumers using 200 kWh per month, it would equate to a reduction of around P140 per month from their bills.)
Mr. Cainglet made the computations during a hearing at the House of Representatives, which inquired into the Malampaya banked gas.
Lawmakers sought answers whether the banked gas will be impaired if it remains unsold once Service Contract 38 held by the consortium that runs the offshore Palawan gas-to-power project expires on Feb. 23, 2024.
Sought for comment, PNOC President and Chief Executive Officer Reuben S. Lista said should he accept the price offered by First Gen of $3.48 per gigajoules, questions might be raised later since the listed company previously offered to buy at $4.50 per gigajoules.
He said several companies are interested in the banked gas, including the Ilijan power plant, which has a contract with the consortium that ends in 2022.
“This is the reason why PNOC is not worried that the banked gas will be stranded,” he said.
Mr. Lista earlier announced that PNOC would be negotiating the sale of the banked gas at a price lower than what it was willing to sell before, after the company twice invited buyers this year but none came forward with an offer.
He said he would be seeking authorization from the PNOC board to allow the company’s management to enter into “comprehensive discussions” or “negotiations” at a price lower than the $6.616 per gigajoules under the Ilijan gas-fired power plant’s gas sale and purchase agreement, or GSPA.
Under a negotiated deal, the Ilijan price will become PNOC’s price ceiling, he said, but declining to give a floor price. It was the minimum price the company was willing to sell before.
Mr. Lista disclosed that First Gen had offered to buy the gas at $4.50 per gigajoules during a verbal discussion. But he said when PNOC made a formal invitation, the Lopez-led group offered $3.48 per gigajoules. A petajoule is equal to a million gigajoules.
The gas, which was paid by the government for its future use, is banked in the reservoir of the Malampaya deepwater gas-to-power project offshore Palawan. A PNOC unit is part of the consortium that developed and operates the project.
The banked gas was bought by PNOC from the Department of Energy in 2009, including all the rights, benefits and entitlements of the total 108.6 petajoules valued at P14.4 billion.
The corporation since then has been trying to sell the gas but was only able to sell 4.61 petajoules to Power Sector Assets and Liabilities Management Corp. in 2013 for P937 million. Another portion at 6.324 petajoules was sold to Pilipinas Shell Petroleum Corp. in 2015 for P2.5 billion.
Five gas-fired power plants in Batangas province, with a combined capacity of 3,211 MW, are the main customers of the Malampaya gas find. The offshore Palawan project is expected to start be depleted starting in 2022 to 2024, but PNOC said the gas find could be stretched until 2027. — Victor V. Saulon