PNOC begins auction of Malampaya’s gas reserves

State-run Philippine National Oil Co. has issued an invitation to bid for the sale of its banked gas from the Malampaya gas project in northwest Palawan.

PNOC president Reuben Lista said the invitation was published to generate investor interest to buy its 97.67 petajoules of banked gas, or unutilized gas, from the Malampaya gas project.

“So we can sell it to other interested parties not only to the current users. It’s also part of the public bidding requirements under RA 9184,” Lista said.

PNOC wanted to use the proceeds from the sale of banked gas to finance its entry into the country’s planned first integrated liquefied natural gas facility.

“We have been trying to sell it (banked gas) since day one of my assumption because that’s my biggest asset aside from the lands,” Lista said.

Lista, however, noted many restrictions imposed on the sale which the board lifted “except the price pegging it at Ilijan price or better.”

“We never stopped hoping to sell it that’s one of the reasons we want it bundled with our LNG Hub project where we continue to evaluate possible partners,” he said.

PNOC said interested parties must consider the maximum average delivery quantity of 32.22 terajoules per day with the delivery point at the Malampaya onshore gas plant in Batangas, or as may be mutually agreed.

PNOC said the banked gas must be consumed by February 23, 2024.

the government previously estimated the sale of the banked gas could fetch about $650 million.

The Management Association of the Philippines earlier expressed concern that the banked gas could no longer be withdrawn because technical constraints.

MAP, one of the country’s active business organizations, said in a position paper  “there is currently no commercial arrangement for its withdrawal from the reservoir.”

“There are only six more years till the SC-38 contract expires and there is no technical solution to withdraw the bank gas within this time frame,” MAP said.

It said PNOC must discuss immediately with the other members of service contract 38 consortium and the Energy Department its options and come up with an agreement on a way forward.

The consortium is composed of Shell Philippines Exploration B.V., as operator, Chevron Malampaya LLC and PNOC unit PNOC Exploration Corp. The consortium’s contract with the government will end by 2024.

“Otherwise, the gas will be stranded,” MAP said.

MAP said certain steps must be done to ensure the continuing development of the natural gas industry, aside from addressing the banked gas issue.

It said the government must recommend to the Commission on Audit to drop the agency’s position on taxation against the Malampaya consortium, which forced Spex to file an arbitration case against the government.

“By dropping the claim, the arbitration cases filed against the government will have no basis and thus will be moot. It will clearly show to investors that the Philippines honors its contracts,” it said.