First Gas seeks add’l gas from Malampaya pipeline

First Gas Corp., the power generation arm of First Gen Corp., is seeking an approval of the Department of Energy (DOE) for the sale of additional gas from the Malampaya natural gas project before proceeding with its 500-megawatt expansion project.

Richard Tantoco, First Gen chief operating officer, said discussions are underway between the gas sellers (Malampaya consortium) and the DOE.

The $4.5-billion Malampaya project is run by the group composed by Shell Philippines Exploration B.V which owns 40 percent; Chevron Texaco (40 percent) and PNOC-Exploration Corp. (10 percent)

 “Just about a week ago we were in discussions with the gas sellers. The gas sellers are in charge of selling the gas on behalf of the government,” he said.

Explaining the need to secure the DOE approval, Tantoco said: “They need to secure one, since they (gas sellers) are operating under the service contract. So if the gas sellers were to sell additional gas, –the use of that gas has to be approved by the government.”

Tantoco said this agreement is crucial in allowing the interested parties to push through with the establishment or the expansion of their respective natural gas-fired facilities.

 “Our understanding is that they are trying to secure an agreement with the DOE right to move ahead with that project probably within the year or towards the tail-end of this year,” Tantoco said.

First Gas will be investing some $400 million for the 500-megawatt San Gabriel natural gas-fired facility.  This project will be jointly undertaken with BG, formerly British Gas.

The First Gen official, however, pointed out that the discussion on the potential sale of the additional gas in Malampaya is still in a “very preliminary stage”.

 “It’s just very general discussions, and we haven’t actually taken the next step, which is to meet and discuss the project with the DOE.”

He said while waiting for the confirmation of the DOE that they could sell additional gas from the Malampaya project, he said all pertinent information on the San Gabriel project have yet to be firmed up.

“The gas sellers have not given the numbers in terms of quantity, price, timing, but we will just have to keep following up,” he said.