The Department of Energy (DOE) will prioritize the return-to-operation of the 1,200-megawatt Ilijan gas-fired power plant that is currently on shutdown because of fuel lack due to the depleting state of the Malampaya gas field.
“We lost 1,200MW of Ilijan, which is powered by natural gas, so this is a priority for us,” newly installed Energy Secretary Raphael Perpetuo M. Lotilla said.
He added “the President has directed that we address the uncertainties over investments in the upstream so that we can mobilize the natural gas around Malampaya and other fields for our needs at the soonest time possible.”
The gas sale and purchase agreement (GSPA) of the Ilijan plant expired in June this year; and the owner of the facility – South Premiere Power Corporation (SPPC) of the San Miguel group – opted not to sign up for any new supply deal with the operator of the gas field.
It was indicated by sources though that there is an ongoing negotiation between SPPC and state-run Philippine National Oil Company (PNOC) for the banked gas to be purchased by the San Miguel subsidiary firm so it can be utilized for Iljan plant’s continued operation.
The biggest question at this point though is: if the banked gas can still be extracted from the Malampaya field given its swiftly declining state of production; as well as the expiration of the project’s Service Contract (SC) 38 by February 2024.
Based on the numbers previously crunched by PNOC, it has been targeting to fetch as much as $750 million to $800 million from the sale of the banked gas.
To recall, PNOC offered its banked gas for auction twice in 2018 – but divestment stalled because it was not able to corner a tender that should have higher or have at least matched the Ilijan gas price, which was then benchmarked at $6.616 per gigajoule.
Lotilla noted the Marcos administration will re-focus investment enticements on oil and gas exploration within the petroleum basins of the Philippines, so the long-desired replacement for the Malampaya field can finally be concretized.
“As the President pointed out, we need to be more energy-secure; and that means that we have to develop our indigenous resources,” the energy chief stressed.
Lotilla conveyed that the action points to be taken will include “clarification of policy” – including that from Congress -- that way, the investment regime in the upstream oil sector can be stabilized.
If a new Malampaya will be discovered, the DOE secretary emphasized that the ‘energy security agenda’ of the country could also be reinforced – and dependence on fuel imports could be lessened.
The past administration attempted to resuscitate petroleum exploration investments, but there had been not much success because of the constant maneuver of China especially in blocks close to the disputed West Philippine Sea.