Philippine National Oil Co. may sell the government’s banked gas from the Malampaya field in northwest Palawan in the international market to provide funding for the planned liquefied natural gas project in the Philippines.
“The first option of trading the banked gas outside of the country is an offshoot of a realization that a domestic sale of the banked gas may pose some difficulty,” state-owned PNOC said in a document submitted to Congress.
The unused Malampaya natural gas, or banked gas, is stored in the Malampaya reservoir and owned by PNOC. It was contracted, paid for by the government and reserved for future use.
The banked gas has accumulated in the past several years.
PNOC owns banked gas equivalent to 97.67 petajoules valued at around P11.9 billion and unsold to date.
The company said with the impending depletion of the Malampaya natural gas field by 2024, “it becomes imperative that PNOC extract and fully recover the remaining purchase cost as well as optimize its potential value at the earliest time possible which should be before the end of 2024.”
PNOC, the country’s oil and gas arm, favored the utilization of its banked gas preparatory to the full development of the proposed PNOC Batangas LNG Hub Project.
PNOC is mandated to develop an integrated LNG facility but has not found an acceptable offer on a government-to-government basis. A joint venture agreement has also raised concerns from lawmakers.
PNOC said the Malampaya gas project had existing gas sales and purchase agreements until 2022.
“This would mean that PNOC’s opportunity to locally sell the banked gas may start only in 2022. 2022 maybe a bit late and may hamper the initiation of the LNG Hub Project due to delayed realization of the needed equity for the project,” it said.
PNOC conceded that international trading might be challenging because the physical transport of gas was not viable, unless it was converted into liquid state through liquefaction.
“Building a liquefaction plant requires extensive capitalization and may not be economical given the limited volume of gas to be liquefied,” PNOC said.
PNOC offered a second option of extracting and burning the gas and selling it in the form of electricity.
“This option can be more viable by adopting the floating storage and re-gasification unit with gas-fired power plant technology. With the technology already existing in the market, burning the gas and selling it as electricity may start as early as next year,” the company said.
PNOC said modular floating power plants were much faster to build and could be considered a good solution in the monetization of the banked gas.