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Thursday, April 25, 2024

Shell set to end natural gas supply to Ilijan power plant

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Shell Philippine Exploration B.V. said over the weekend the Malampaya gas field is about to end its supply and purchase agreement over the 1,200-megawatt Ilijan gas-fired power plant in Batangas City.

SPEX, the operator of the project, issued the statement on behalf of Malampaya joint venture partners UC38 LLC and PNOC Exploration Corp.

SPEX did not provide the reason for the conclusion of the GSPA, although supply from the Malampaya gas project has been dwindling in recent years and is expected to be depleted by 2024.

The Department of Energy assured that despite the end of the GSPA to Ilijan, there will be no brownouts because of adequate power supply in Luzon.

It is not clear where the Ilijan plant will source its gas supply following the end of the GSPA, but sources said San Miguel Corp. was looking at tapping the banked gas from Malampaya.

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This developed as the government is set to turn over the 1,200-MW Ilijan natural gas plant in Batangas City to SMC power arm SMC Global Power Holdings this month.

South Premiere Power Corp., a subsidiary of SMC Global Power Holdings Corp., was designated as the plant’s independent power producer in 2010.

Kepco Ilijan Corp. is in charge of the plant’s operation and maintenance, while state-run Power Sector Assets and Liabilities Management Corp. supplies its fuel requirements.

“Malampaya is indeed a crown jewel of our country and a shining example of how a public-private partnership has powered the Philippines. It continues to fuel the country with cleaner-burning natural gas; create significant, positive social impact to communities in Batangas, Palawan and Oriental Mindoro; and generate direct government revenues, with over $12 billion already remitted to the government since the start of commercial operations in 2002,” SPEX said.

Aside from Ilijan, other power plants that run on Malampaya natural gas are Sta. Rita power station (1,000 MW), San Lorenzo power station (500 MW), San Gabriel power station (414 MW) and Avion power station (97 MW). Together, they generate more than 3,200 megawatts, representing about a fifth of the national power demand.

The Malampaya gas field, located 850 meters deep offshore northwest Palawan, has proven reserves of about 2.5 to 3.5 trillion cubic feet of gas, 85 million barrels of condensate and 20 to 40 million barrels of oil.

Prime Infrastructure Holdings Inc. of port magnate Enrique Razon Jr. earlier announced plans to acquire a controlling stake in the Malampaya project from Udenna Corp. of businessman Dennis Uy.

Prime Infra said that while Malampaya’s service contract is set to expire in 2024, it was hoping to continue operating the project while applying for an extension so it could invest in its expansion and sustain the economic and social benefits that Malampaya is providing the country.

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