State-led PNOC seeks partners for integrated LNG hub project

By Victor V. Saulon, Sub-editor
STATE-LED PHILIPPINE National Oil Co. (PNOC) is seeking partners to build an integrated liquefied natural gas (LNG) hub under new terms that defines the project under a “solicited” scheme, after the government agency failed to attract acceptable proponents.
“They (PNOC) asked the approval of the board to look for a partner through solicited terms,” Department of Energy (DoE) Undersecretary Donato D. Marcos told reporters in a chance interview after a Senate hearing on Thursday.
The DoE Secretary chairs the PNOC board by virtue of his position as head of the department. PNOC President and Chief Executive Officer Reuben S. Lista previously said he preferred an unsolicited proposal for the project, which would give the original proponent a chance to match any counter-proposal from a challenger.
The Asian Development Bank (ADB), which the PNOC tapped to advise on the project, described a solicited tender as one that would require the bank to assist the agency in structuring the project.
The assistance includes preparing the pre-feasibility or feasibility study, drafting the tender and legal documents, and assisting in the negotiation of the project with the winning bidder until the concession agreement is signed.
Mr. Marcos said they did not receive any offers that were compliant, adding that no proponents submitted a comprehensive proposal.
Under a solicited proposal, Mr. Marcos said PNOC and its chosen partner would establish their own terms of reference.
“It is a race,” he said, with the bidders presenting their technical, legal and financial qualifications. The DoE would be the final approving agency with the issuance of permits that clear the project’s compliance with existing regulations.
Late last year, PNOC first hinted at bidding out the LNG project, which is expected to cost around $2 billion, after the unsolicited proposals submitted by foreign entities failed to meet specific requirements set by the company.
Mr. Lista had said the first proposal evaluated by the technical working group came from Korea Electric Power Corp. (Kepco). The submission was assessed but returned to the proponent because of unmet requirements, he said.
The technical panel then evaluated a submission from Lloyds Energy Group LLC and its partner Itochu Corp., which was also returned.
A proposal from China National Offshore Oil Corp. (CNOOC) was also returned because it was directed to the DoE instead of the PNOC technical working group, Mr. Lista said.
Mr. Marcos said the DoE had so far completed pre-application conferences with around 15 groups keen on putting up an integrated LNG hub, including the project being envisioned by PNOC.
He said the department would be meeting again on Friday with CNOOC, which he said partnered with Phoenix Petroleum Philippines, Inc.