THE so-called deal of the century, or the contract to operate the Philippines’s top gas field, might not be too profitable, if at all, one of the country’s most prolific businessmen said over the weekend.
First Pacific Co. Ltd. Managing Director and CEO Manuel V. Pangilinan admitted, though, that his company has yet to fully grasp the idea of auctioning off the Malampaya Deep Water Gas-to-Power Facility after the private partner’s concession expires in 2024. But at this stage of the plan, the firm will likely not participate in the bidding of the deal.
“We are not aware of the project, so maybe not on our radar,” he replied, when asked if his group would be interested in gaining a hold of the project.
Metro Pacific Investments Corp., the local flagship of Hong Kong-based conglomerate First Pacific, has interests in the power industry, having a significant shareholding in power distributor Manila Electric Co. (Meralco).
But it seems that the project might not be too profitable, Pangilinan implied, when he said in the vernacular: “Paubos na iyon. Ano pa’ng bibilhin mo doon [The reserves are depleting. What are you going to invest in]?”
The Malampaya gas field currently supplies natural gas to the 1,200-megawatt (MW) Ilijan, the 1,000-MW Santa Rita and the 500-MW San Lorenzo plants. The gas field is 850 meters deep offshore northwest Palawan and has proven reserves of about 2.5 trillion to 3.5 trillion cubic feet of gas.
Malampaya is regarded as one of the longest subsea pipelines in the world at 504 kilometers. It extracts natural gas from the Malampaya gas field covered by Service Contract 38 that is condensed and is delivered straight to power plants.
The facility provides roughly 45 percent of Luzon’s power-generation requirements.
But experts believe that the facility will run out of gas in nine years’ time. Roughly 1 trillion cubic feet of gas has been consumed to date.
Pangilinan’s comment came after San Miguel Corp. President Ramon S. Ang declared the project, dubbed as the “deal of the century,” in an economic conference in Manila last week. Ang said his company, which has a power-generating subsidiary, is interested in the deal—even before the government decides whether to bid it out again.
The concessionaire for the Malampaya facility includes Shell Philippines Exploration BV, Chevron Texaco Malampaya Llc. and Philippine National Oil Co. The quarter-of-a-century-long contract was made on the assumption that the field only has a life of 25 years.
Should the gas facility become totally empty by the time the contract expires, the Philippines will have to face another power crisis. Hence, scouting for the next gas field should be of national priority.
Earlier this month, Otto Energy Ltd. Director Rufino B. Bomasang said the players in the power sector should start exploring for more gas fields in order to offset—if not totally saturate—the projected deficiency that comes with the expiration of Malampaya.
Service Contract 55, which covers the southwestern part of Palawan, could be enough to replace the gas facility, he predicted.