PNOC abandons search for JV partner in LNG hub project

PHILIPPINE National Oil Co. (PNOC) has terminated its selection of a joint venture (JV) partner for its proposed liquefied natural gas (LNG) hub in the country, formally ending its bid to spearhead what could have been a state-led facility for the imported fuel.
“Pursuant to the recitals under PNOC Board Resolution No. 2566, S’2019, the PNOC Management has been directed to conclude and terminate all activities relating to the competitive selection for the joint venture development of the PNOC Liquefied Natural Gas Hub Project,” the company said in a bid bulletin, its third for the specific venture.
“Fees paid by prospective private sector participants to the PNOC for the purchase of the instructions to Private Sector Participants — Eligible Documents (Volume 1) Forms and Annexures shall be returned,” it added.
It instructed “affected parties” to coordinate with the joint venture selection committee secretary for the processing of the return of fees. The bid bulletin was signed by Glenda G. Martinez, the chairperson of the committee. It was dated Jan. 17, 2019.
PNOC’s announcement came after Energy Secretary Alfonso G. Cusi told reporters that the company, which serves as the commercial investment arm of the Department of Energy (DoE), was looking instead to join other entities that are venturing in a similar project.
“When I gave the instruction to put up the LNG terminal I was hoping, I told them the lead is PNOC. So if you’re the lead, do it, start it. I was hoping that they will be able to do it. They were doing it; they were looking for partners for the technical and commercial. Fine. I said let’s just start the project),” Mr. Cusi said.
However, he said the project could not be started immediately because PNOC had to do initial studies and prepare the budget that will be presented to Congress for approval.
“I said, we’ve been in this for two years. I said, had that been started, if that had broken ground, maybe next month we’d be operating the first power plant. Until now we’re still in the drawing board,” said Mr. Cusi, who is the ex-officio PNOC chairman.
“We’ve been looking. Who are the parties that could make it happen,” he added.
“It’s our aspiration for the country to become [an] LNG hub for the region and at the same time to assure the continuous supply of gas for our national energy security,” Mr. Cusi said.
Asked about the direction for PNOC after other entities come forward with their own imported LNG storage facilities, he said: “They’re working to partner with CNOOC-Tanglawan. We’ve been saying, yes let’s go there. So we’ll still protect the interest of the Republic, of the people, of consumers, of the country if we have representation in the board.”
Mr. Cusi was referring to the project LNG project proposed by Davao City-based Phoenix Petroleum Philippines, Inc. in partnership with Chinese firm CNOOC Gas and Power Group Co., Ltd.
Phoenix Petroleum, which is led by businessman Dennis A. Uy, earlier this month said Tanglawan Philippine LNG Inc., the project entity, was granted “notice to proceed” by the DoE to build an LNG terminal in Batangas. It previously described its partner as China’s largest importer and terminal operator of the fossil fuel.
Mr. Cusi said PNOC would still “slug it out” on how big of a stake it would be taking in the project.
“That is a commercial decision that has to be taken up by them,” he said. “As the chair, I don’t want to preempt them.”
Asked about what led PNOC to choose the Tanglawan project, Mr. Cusi said: “That’s basic — because they meet the standard required. They meet the criteria.”
The need to build an LNG import facility comes amid fears that the Malampaya gas supply is set to start depleting by 2024. Since its inception in 2001, the gas-to-power project has been providing a stable supply of energy, meeting 35% to 40% of Luzon’s power needs, the DoE has said. — Victor V. Saulon