PXP eyes Malampaya facilities to house integrated gas hub

UPSTREAM oil and gas company PXP Energy Corp. (PXP) has formalized its intent to participate in the LNG (liquefied natural gas) sector.

Pangilinan-led PXP said on Tuesday it submitted last Monday an unsolicited proposal to the Department of Energy (DOE) for the strategic development and utilization of an Integrated Gas Hub in Malampaya upon the expiry of Service Contract 38 (SC 38) in 2024.

PXP said the use of the Malampaya facilities as the Integrated Gas Hub will support the development of a robust indigenous gas industry.  This, it added, is consistent with DOE’s commitment to pursue national development through the twofold agenda of attaining energy independence and implementing power market reforms as contained in the Philippine Energy Plan, and is aligned with the DOE’s clean fuel strategy, including the reduction of dependence on coal.

The unsolicited proposal is also seen to yield substantial foreign-exchange savings resulting from the reduced importation of coal and other fuel supply, added PXP.

When sought for comment, Energy  Secretary Alfonso Cusi said he needs to carefully study the proposal. “I can’t say anything yet. I need to study it first. I’m waiting for the report of my staff and PNOC-EC  [Philippine National Oil Co.-Exploration Corp.] management,” he said in a text message.

SC 38 covers the Malampaya gas-to-power project, which is being undertaken by the Malampaya consortium.

It is developed and operated by SPEx (Shell Philippines Exploration BV) with a 45-percent stake on behalf of joint-venture partners Chevron Malampaya Llc.,also with a 45-percent stake and PNOC-EC, which holds the remaining 10 percent.

PXP has also expressed an interest to acquire the 45-percent ownership of Chevron Malampaya Llc. in SC 38 through the right to match of the other SC 38 consortium members.

SC 38 will expire in 2024.  SPEx wants the contract extended but the DOE has yet to grant the request.

When asked how the possible entry of Pangilinan’s group will affect the consortium’s plans moving forward, SPEx said, “We cannot comment because we are not privy to details on whatever is happening among MVP (Manuel V. Pangilinan), Chevron and other parties.”

However, SPEx confirmed that it received advice from Chevron on its decision to sell its interest in the Malampaya gas project. “We are discussing the matter with Chevron,” an official from SPEx said.

“Our focus remains on operating the Malampaya natural gas facilities safely, reliably and efficiently to ensure we keep powering the Philippines with cleaner-burning, domestic natural gas,” added the official when sought for comment.

The gas facility supplies 40 percent of Luzon’s power requirements and 30 percent nationwide.

The gas facility fuels the following gas plants: the 1,000-megawatt Santa Rita, the 500-MW San Lorenzo, the 1,200-MW Ilijan, the 97-MW Avion and the 414-MW San Gabriel.

SPEx had said the Malampaya gas reserves could last up to 2027 or up to 2029, depending on the demand.

PXP said the Malampaya infrastructure and distribution network, strategically positioned in the West Philippine Sea, is envisioned to support the continued development of the Malampaya resources, as well as the economic development of Sampaguita Field and other nearby prospects under SC 72, which is operated by PXP through Forum (GSEC 101) Ltd.

PXP Energy holds a 78.98-percent operating interest in SC 72 or the contract to explore Recto Bank in the West Philippine Sea through London-listed Forum Energy Plc. It also has a direct operating interest of 50 percent in SC 75 northwest Palawan. It is also waiting for guidance from the Philippine government in respect of any future activity in the SCs.

“PXP, through Forum Energy Ltd., will take guidance from the Philippine government in respect of any future activity in SC 72 and SC 75. The company is mindful that the Malampaya gas resource, which supplies about 40 percent of Luzon’s power requirements, could be exhausted within the next decade.

The company, therefore, remains hopeful that the force majeure imposed on SC 72 and SC 75 will be lifted by the Department of Energy soon for the company to be able to resume exploration works in these SCs,” it said earlier.