FIRING LINE: Malampaya, bleeding out?

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By Robert B. Roque, Jr.

As political posturing for 2022 and corruption exposes dominated news and social media chatter last week, little attention has been given to the headline “Malampaya field stops supplying gas to First Gen plants; rate hikes feared” (Manila Bulletin).

There had been an unplanned maintenance shutdown of the Malampaya Deepwater Gas to Power Platform. It is believed to set off a series of events that would ultimately lead to a numbing scourge to consumers.

Malampaya’s supply is dying out, but it’s supposed to deliver natural gas till 2024. However, in the weekend of September 11-12, the 1,000-megawatt Santa Rita gas plant and its San Lorenzo plant already stopped receiving gas supply from Malampaya.

The Department of Energy (DOE) has called on Malampaya operator Shell Philippines Exploration B.V. (SPEX) to explain the gas restrictions that affected the delivery of fuel to the natural gas power plants. But there are power industry experts who believe this could be the beginning of curtailed supply to First Gen’s natural gas power plants.

First, let’s be clear on why authorities can’t sleep on this. Malampaya supplies natural gas to Luzon power plants on which we depend on a capacity of 3,286-megawatts. The Sta. Rita and San Lorenzo gas power plants, which have a combined capacity of 1,569-MW, still operate. But to do so, they now use more expensive liquid fuels.

Supply cut-off from Malampaya has also affected the 1,200-MW Ilijan gas power plant’s output, limiting it to only 30 percent or 360-MW. If we’d consider looking at worse, the 420-MW San Gabriel gas power plant stopped operations since it’s not designed for alternative fuel.

SPEX has informed the DOE that the gas restrictions were lifted last Sept. 14, but the damage has been done. It resulted in higher prices that adversely impact consumers, according to the DOE.

An industry expert explained that barring any outage of other power plants and a sudden spike in demand, tighter supply conditions and the use of more expensive fuels could result in higher power rates for consumers.

Remember that several electric cooperatives already experienced generation charge increases of more than P1.50 per kilowatt-hour last May and early June. Meralco, too, is on a six-month streak of raising its electricity rates.

One industry expert tells Firing Line that this is just a prelude to what can happen when Malampaya conducts its scheduled maintenance next month. It’s not like there’s nothing else to be done. But the situation calls for focused and decisive action.

Perhaps, electricity retailers can just bid out new, more stable, and most of all, cheaper contracts to replace the intermittent natural gas procurement from Malampaya. So what say you, Energy Secretary Al Cusi?

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