The Department of Energy Alfonso G. Cusi has ordered state-owned Philippine National Oil Company (PNOC) to seek “the best price” in its negotiations with potential buyers of Malampaya-extracted banked gas.
Despite the banked gas never making it to the divestment direction because of a price cap, Cusi said it is about time the government decides on the utilization of the gas to generate electricity that is also beneficial to the consumers.
“PNOC will have to look for the best price possible…what is the best price that we can sell it at prevailing market conditions, so they’re looking at that rather than waiting,” the energy chief told Manila Bulletin.
“Previous management set a cap, so it was never sold. Our fear is: we might be losing opportunity in selling it, so PNOC has to look at its options,” Cusi highlighted.
The previous price cap was based on the Iligan gas price of $6.616 per gigajoule, but PNOC said the initial offer can be negotiated if the buyer will not shortchange the government’s proceeds target.
PNOC was looking at proceeds from $700 million to $750 million, based on the Ilijan price. However, if the sale cost per gigajoule decreases, the range of proceeds will also lower.
The price of liquefied natural gas in the Asian market at $9.47 per gigajoule which PNOC noted was higher than its benchmark price.
PNOC said that if their aimed negotiations will not have a positive outcome, they can still wait a few more years and offer it to new power plant project off-takers.