Private firms’ gas aggregation plan seen as shield vs LNG price spikes

THE PROPOSAL of Prime Infrastructure Capital Inc. and First Gen Corp. for gas aggregation may likely shield the Philippines from the volatility of liquefied natural gas (LNG) prices, the country’s Energy chief said.

“That’s what we are trying to prevent from happening in terms of spikes in the price of imported LNG and the plan is to blend the lower price of Malampaya natural gas with the imported LNG so that we can soften the impact or the volatilities of imported LNG,” said Raphael P.M. Lotilla, secretary of the Department of Energy (DoE), in an interview with One News.

Mr. Lotilla said the companies’ proposal could soften the impact of any unforeseen surges in LNG prices.

Prime Infra and First Gen are jointly working to develop a gas aggregator framework that is expected to streamline the distribution of natural gas from the Malampaya field and imported LNG.

First Gen is one of the seven proponents of LNG terminal projects in the Philippines. The Lopez-led energy company is developing an integrated LNG and regasification terminal. It recently secured a cargo of LNG from Shell Eastern Trading Pte. Ltd.

Prime Infra, through its subsidiary, Prime Energy Resources Development B.V., is a member of the Malampaya consortium, the others being UC38 LLC and state-led PNOC Exploration Corp.

President Ferdinand R. Marcos, Jr. in May signed the extension agreement renewing the service contract for the Malampaya gas field until 2039.

“One of the things that the President did was to extend the service contract of the Malampaya for another 15 years and that’s because the present production from Malampaya has been on the decline as anticipated because it is finite or limited resource,” Mr. Lotilla said.

Mr. Lotilla also said that though the supply from Malampaya is expected to dwindle, it is necessary to extend the contract as it would also encourage the consortium to drill new wells near the Malampaya field.

“Towards 2024, we are going to see the actual drilling in the near fields,” he said.

The Malampaya consortium is expected to spend around $600 million on new drilling within Service Contract 38, including drilling for two new wells at the gas field as part of its commitment under the contract renewal. — Ashley Erika O. Jose