MVP urges Goverment to craft study on LNG

 

Businessman Manuel V. Pangilinan stressed the need for the government to provide a well-crafted study on liquefied natural gas (LNG), particularly on a plan to bid out the construction of a 105-kilometer gas pipeline that will run from Batangas City to Manila, in a bid to boost gas-related investments in the country.

The project, more known as the “Bat-Man” gas pipeline, was proposed in previous administrations, but failed to kick off primarily on concerns involving the supply of gas and sufficient demand.

One particular concern the government should focus on is offtakers of LNG, according to Pangilinan.

“Who will be the consumers?
Why will you build it when there is no sure market. It could be the industrial customers and the power plants, but then you have got to import the gas eventually,” Pangilinan said, when asked if his group is interested to join the auction should it finally happen this year.

Another concern raised by the chairman of the Manila Electric Co. (Meralco), a unit of which is
engaged in power generation, is on the infrastructure that will convert the gas into liquid.

LNG is natural gas converted into liquid state for easier storage and transportation. Upon reaching its destination, the LNG is re-gasified so it can be distributed through pipelines.

“You have to build a regas facility somewhere in Bataan, Batangas, Cavite or wherever. You will import LNG so you have to regas it and push it through the pipeline, and then, of course, who buys the gas?

“As I said, it could be industrial customers, but then eventually when you satisfy the demand, who else? Also, you have to pipe the gas. That’s expensive,” Pangilinan said.

All these factors, according to him, must be thoroughly planned.

“So, we really need to plan everything. Why build something, in the first place, if there is no market. Importation of gas is also another factor.

The regas facility and the pipeline are also needed,” the businessman pointed out.

These were the same concerns earlier raised by Pilipinas Shell Petroleum Corp. Country Chairman Ed Chua,
who said the gas-pipeline project should have offtakers or buyers of electricity.

“If you have a pipeline, you have a start and an end. So, where is your starting point? You should have an import facility or, if there is additional gas from Malampaya or, another Malampaya, you have a source. Now, who is the customer?” the Shell official  asked rhetorically.

The Department of Energy (DOE) said the Bat-Man pipeline will be auctioned via the public-private partnership (PPP) scheme. However, this was seen unlikely happening
this year.

“The DOE has several questions to the technical advisor of the PPP Center that they have to address. I am not sure if we can still do it this year,” said Melita Obillo, DOE director for Oil Industry Management Bureau.

The project was already approved by the Neda Investment Coordinating Council, albeit with questions. The natural-gas pipeline was earlier estimated to cost between $100 million and $150 million.

DOE Officer in Charge Zenaida Monsada earlier said the project can be elevated for approval to the Cabinet once the questions raised by the Neda and the Department of Finance have been addressed.

“In principle, this is a government project. We don’t want  it to be delayed but we want to be sure that once it’s tackled by the board, everything will go smoothly,” Monsada said.

PPP Center Executive Cosette V. Canilao said it was the DOE that pulled out the project from the Neda Board.

The PPP Center earlier tapped Rebel Group International BV to conduct  the feasibility study for the project. One of the questions raised includes the specific location of the pipeline.

Former Energy Secretary Carlos Jericho L. Petilla earlier noted that the proposed study indicated the pipeline will be constructed from end to end, without customers in between. He wanted a revision of the study.

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