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DoE demands SPEX explains natgas cut

These restrictions affect the electricity prices that consumers pay and they will have to be informed on the causes of price increases

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Moving swiftly, the Department of Energy sought an explanation from Shell Philippines Exploration Corp. (SPEX), which remains the operator of the Malampaya natural gas project, on the sudden interruption in the fuel supply to power plants that are mostly operated by the Lopez group’s First Gen Corp. (First Gen).

Energy Secretary Alfonso Cusi had sought accountability from the operator since the disruption will likely translate to higher electricity bills as the power plants shifted to the use of more expensive energy source.

Five power plants in Batangas use natural gas as fuel and supply about 30 percent of electricity in the main Luzon island.

These electricity generators include First Gen’s Avion, San Gabriel, San Lorenzo and Santa Rita which have a combined capacity of 2.1 gigawatt (GW) and the Ilijan Plant. Korean-backed Kepco Ilijan Corp. operates the 1-GW natural gas-powered Ilijan plant.

Cusi said Tuesday that the Malampaya operators should inform stakeholders before limiting their gas supply as customers would have to carry the burden of the resulting higher power cost.

“These restrictions affect the electricity prices that consumers pay and they will have to be informed on the causes of price increases,” Cusi said.

SPEX has committed to resume natural gas supply, First Gen reported to the stock exchange.

The Udenna Group of Davao City tycoon Dennis Uy had purchased SPEX’s stake in the Malampaya project but it has yet to obtain an approval from government due to the stalled granting of the consent from 10-percent partner state-owned Philippine National Oil Company-Exploration Corp.

Expensive condensates used
Since the supply pause started, the Santa Rita and San Lorenzo plants have been operating using condensate as fuel while Avion has been using diesel.

“San Gabriel does not have a dual-fuel capability and had to shut down,” according to First Gen.

First Gen said it received an advice from the Service Contract 38 consortium that they expect to slowly start supplying gas from Malampaya to the First Gen units.

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