Water under the bridge

Last year, Razon-led Prime Infrastructure Capital Inc. and Lopez-owned First Gen Corp. said they were in discussions to develop a gas aggregation framework using the latter’s liquified natural gas (LNG) terminal in Batangas.

The two explained that gas aggregation would make it possible to blend declining volumes of indigenous Malampaya gas with imported LNG. They said that this framework would ensure a least-cost solution for consumers, enhance energy security and provide a competitive power generation market, while exploration activities leading to the commercial development of new indigenous natural gas fields are undertaken.

Prime Infra pointed out that the gas aggregator proposal will provide an orderly system of natural gas distribution.

The proposed gas aggregation strategy has the support of the Department of Energy. According to Energy Secretary Raphael Lotilla, the proposal could help cushion the impact of a surge in prices of LNG because of the Ukraine-Russia war.

It has also been presented to President Marcos who was quoted as saying that this gas aggregator idea is the key.

Natural gas aggregation allows a group of consumers to combine their natural gas usage to form a buying group which, with its greater bargaining power, may be able to secure lower to more stable natural gas prices in today’s competitive market. An aggregator meanwhile is a person or organization that brings this group of consumers together to be able to get better terms for the group members.

There are talks that a proposed LNG bill would legislate the creation of this LNG-buying scheme.

Aggregation, however, should be something agreed upon by the buyers, not something imposed on them as businesses adhere to the spirit of laissez-faire where government interference is frowned upon. The opposite could open the market to abuse that might lead to higher electricity prices.

Prime Infra, through subsidiary Prime Energy Resources Development BV, heads the Malampaya consortium. It holds a 45 percent operating stake in the Malampaya gas-to-power project.

President Marcos has extended the consortium’s service contract for 15 years to ensure continued production at the Malampaya gas field which delivers around 20 percent of the country’s electricity requirements.

Under the terms of the extended contract, the consortium is required to develop additional supply around the Malampaya reservoir.

There are competitive energy practices that benefit consumers. Thus, the government should encourage fair competition or maybe see the latest developments elsewhere as a model to get the companies competing on a higher, tighter plane to provide affordable but more efficient services.

This month marked a milestone alliance among former business rivals San Miguel Corp., the MVP Group and the Aboitiz Group. It is an example of how melding competitors to match or better their other rivals work to the benefit of the consumers.

In a landmark development for the Philippine energy sector, Meralco PowerGen Corp., Aboitiz Power Corp., and San Miguel Global Power Holdings Corp. are launching the country’s first and most expansive integrated LNG facility in Batangas.

 In a deal which values the entire enterprise at $3.3 billion, MGen and AP will jointly invest in two of SMGP’s gas-fired power plants, namely the 1,278-megawatt Ilijan power plant and a new 1,320-MW combined cycle power facility which is expected to start operations by the end of this year.

The three companies are also acquiring the LNG import and regasification terminal owned by Linseed Field Corp. which will be used to receive, store and process LNG fuel for the two power plants, thus fully integrating the local energy sector into the global natural gas supply chain, Aboitiz Power announced.

It said that the collaboration will substantially augment the country’s power supply with over 2,500 MW of generation capacity once fully operational, backed by advanced LNG storage and regasification capabilities.

Aboitiz Power chairman Sabin Aboitiz noted that both LNG and renewables are needed to achieve a balanced energy mix and well-planned energy transition, but above all, this is a big win for the Philippines and the people since economic development is impossible without energy security.

SMGP chairman Ramon Ang emphasized that for the first time, three leading power companies are working together to secure the country’s energy needs while transitioning toward cleaner power sources.

For his part, MGen chairman Manuel V. Pangilinan stressed that apart from transforming the country’s energy landscape, this symbolizes a milestone alliance among major players in the energy industry toward a more sustainable future.

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