The depleting Malampaya field lost the 1,200-megawatt Iljan plant as a major gas-offtaker (buyer) of its output starting this June 6, as the buyer will no longer renew its expiring gas supply and purchase agreement (GSPA) with the consortium led by Shell Philippines Exploration B.V.
The Ilijan plant is currently being operated by Korea Electric Power Corporation (KEPCO). It is owned by state-run Power Sector Assets and Liabilities Management Corporation (PSALM), a transferee-company of the assets and liabilities of National Power Corporation (NPC) at the course of its privatization.
But since the plant’s build-operate-transfer (BOT) contract will also lapse this month, June, turnover talks are reportedly being sorted with South Premiere Power Corporation (SPPC), a subsidiary of SMC Global Power Holdings Corp. of the San Miguel group, which won the deal as the facility’s independent power producer administrator (IPPA) when the facility’s supply contract was privatized in 2010.
Under PSALM’s privatization terms for the supply contracts, the ownership of the plant has to be turned over to the IPPA at “zero value” upon the expiration of the facility’s BOT contract provided that all outstanding obligations are mutually resolved by the parties-in-interest.
SPEX Asset Manager Albert Emas, in a media statement, has stipulated that “Malampaya is about to conclude its gas supply and purchase agreement with National Power Corporation for supply of indigenous natural gas to the 1,200MW Ilijan gas-fired power plant.
In the past two years, the gas supply from Malampaya to the Ilijan facility had been recurrently suffering from "gas restrictions" that the plant’s electricity generation had to be frequently de-rated (reduced) at the scale of 500 to 600 megawatts.
According to sources, there was “no keen interest” on the part of PSALM or even to its prospective owner San Miguel to renew the gas contract with Malampaya, hence, the Ilijan plant will no longer draw its fuel supply from the Malampaya gas field.
PSALM President and CEO Irene Joy Garcia previously told reporters that the government-run firm will only agree to an extension of Ilijan’s gas supply contract if the Malampaya consortium can prove that they can still extract enough gas to supply to all of their off-taker power plants.
Absent that, the company indicated that alternative sourcing of gas has to be pursued – primarily if the turnover of the plant will already be concluded with its IPPA.
On the part of the San Miguel group, it is already looking at a timeline of bringing in imported liquefied natural gas (LNG) by August this year, and that will be the fuel it will be feeding to its gas-fired power facilities, including that of the Ilijan plant.
Even the gas plants of First Gen Corporation will also be leaning partly on LNG for its fuel utilization by the end of the year upon the commercial operation of its offshore import facility.