PNOC-EC allots P100M for CNG retail business

MANILA, Philippines - PNOC-Exploration Corp. (EC), the oil and gas exploration arm of state-owned Philippine National Oil Co., will spend more than P100 million this year to support its retail compressed natural gas (CNG) business.

It was learned that PNOC-EC will allot P102.9 million for 2011 out of the total fresh capital of P400 million for the planned establishment of a retail network that will sell CNG as fuel for public utility buses within two years.

To ensure the smooth distribution of natural gas for public transport, PNOC-EC will take over the CNG daughter station in Mamplasan and the mother station in Batangas from Pilipinas Shell Petroleum Corp.

Once the infrastructure support is completed, the Department of Energy(DOE) plans the use of imported liquefied natural gas (LNG) as fuel to achieve its target of 1,000 CNG buses in the short term.

The proposed master plan for the natural gas industry, which is being drafted by the Japan International Cooperation Agency, is expected to be completed by September this year.

The DOE, while pushing for the country’s natural gas infrastructure development, is poised to compel Shell Philippines Exploration BV to sell excess gas from the Malampaya natural gas field in Palawan to PNOC-EC, which has a share of 10 percent in the consortium.

It would be noted that the unutilized gas should be enough to generate between 150 megawatts to 300 MW of power.

Meanwhile, the $1.3-billion Batangas-Manila natural gas infrastructure project pipeline is expected to deliver natural gas from Tabangao, Batangas to the decommissioned 850-MW Sucat bunker fuel-fired power plant.

The DOE is looking at forwarding a bill to manage and monitor fuel pipelines to avoid any controversial incident similar to that of the Batangas-Manila fuel pipeline

Energy Undersecretary Jay Layug earlier said PNOC-EC would be bidding out soon the contract for the new CNG technology.

Asked what technology to use, Layug said. “It will depend on the public bidding of PNOC-EC. The Koreans, Chinese and Australians have approached us wanting to replace the technology we have now. So PNOC-EC has to conduct a public bidding. The existing technology is from an Argentine company – Galileo.”

According to Layug, the takeover by the government of the CNG operation is welcomed by the bus operators.

“The bus operators were more than happy when they heard that PNOC-EC will take over. We have to take control of the project if only to ensure success,” he said.

However, Layug said the CNG price, under PNOC-EC, would be slightly higher but would still be lower than prevailing diesel prices.

“It will slightly increase. Right now the price of CNG is around P14.52, and now we anticipate when PNOC-EC takes over since it’s a new investment, it might increase a bit by P4 to P6, which is still much cheaper than diesel,” he said.

With the addition of new CNG stations, he said they expect more buses to run on CNG.