THE Malampaya consortium said over the weekend that it is not refusing the sale of banked gas to SMC Global Power unit South Premier Power Corporation (SPPC), which operates the 1,200-MW Ilijan power plant in Batangas province.
The consortium, in a statement, said there is no refusal to sell it to the Ilijan plant “because there is no legal means by which the sale of gas to the plant could be made.”
The consortium is composd of the Philippine National Oil Company- Exploration Corporation (PNOC-EC), UC38, and Prime Energy Resources Development B.V. (Prime Energy).
SMC Global Power had said in a press statement that the Ilijan facility is on extended outage following the refusal of Shell Philippines Exploration BV (SPEX) to supply the 70 petajoules (PJ) in banked gas from Malampaya that SPPC acquired from PNOC in June 2022.
In the meantime, SMC’s power arm said it is conducting repair works on the power plant to improve its fuel efficiency and generation ramp rate. The original gas supply agreement of the Ilijan Plant with Malampaya also expired in June 2022.
Prime Energy acquired the 45-percent operating stake of SPEX in the Malampaya deep water gas-to-power project effective November 1, 2022. The renaming of SPEX to Prime Energy is already in process following the acquisition of SPEX shares.
Prior to the SPEX and Prime Energy transaction, SPPC purchased the remaining banked gas of PNOC for $1.2 billion. Based on a filing, SPPC entered into a gas supply agreement for 70.26 petajoules of banked gas with PNOC at a daily volume of dispatch sufficient to run the Ilijan plant at 45 percent to 75 percent plant factor. This volume of gas is adequate and expected to support the Ilijan plant’s fuel requirements until February 2024.
The PNOC had confirmed earlier that it sold the remaining uncontracted banked gas to SPPC under the Gas Sale and Purchase Agreement (GSPA) executed on June 23.
At the weekend, the Malampaya consortium said there is “no live contract” for the supply of gas from Malampaya between SPPC and SPEX, now Prime Energy. It said that the Ilijan GSPA had already lapsed last June. Without a live contract Malampaya gas cannot be sold legally to SPPC, it pointed out.
The consortium also stressed that diverting the gas to Ilijan could result “in depriving the other power producers with active contracts in the Luzon grid of natural gas.”
The gas from Malampaya is currently being utilized to feed the gas plants that are mostly owned and operated by First Gen Corp. The volume of gas is nearing depletion, “so the supply covered by Service Contract 38 needs to be fairly distributed.”
Moreover, the consortium said there is no basis to the claim that the Luzon power grid would be affected if the Ilijan power plant was not given priority in Malampaya’s banked gas allocation.
There is no additional power that would be generated by the unwarranted priority distribution of banked gas to Ilijan, it said. “If gas is supplied to Ilijan, the sum is the same. This will actually mean less supply to the other power plant-customers,” the consortium explained.
Finally, it said all banked gas that can be distributed is already being distributed as per the contract terms. “There is no such thing as banked gas stored that belongs to SPPC or anyone else. The consortium parties, which include government agencies, are diligently applying the terms of the contract and ensuring that all that can be done, within the terms of the contracts in place is done to produce gas and support power generation,” it said.