A source privy to the ongoing negotiations being spearheaded by the Department of Energy (DoE) divulged that an eightmonth extension on the gas supply’s utilization is being batted for.

Among the three shareholders in the Malampaya project, which include Shell Philippines Exploration B.V. and state-run Philippine National Oil Company, it was gathered that ChevronTexaco was most vocal about its position on the matter.

"The parties are eyeing that they can arrive at something as they meet on January 12," the industry source said.

It was further culled that the Service Contract 38 consortium-members actually felt that the government has already gotten something from them when they were persuaded into allowing the entry of a ‘third party’ to develop the proposed oil rim beneath the Malampaya gas field, even if such venture would turn out too risky, especially if something inauspicious would happen to the gas production process.

As far as settling the accumulated cost of the unused gas supply for the Ilijan facility is concerned, the Malampaya consortium is still bent on requiring one-time settlement of 0 million obligation.

The timeframe set for this is 2009 since that is also the anticipated period when the banked gas would have to be utilized.

It would be recalled that Ilijan’s dispatch until early last year have just been hovering at around 50-percent or just a little bit higher than its installed capacity; way below its contract levels.

One of the more contentious issues reportedly being resolved in the negotiation process was that on whether or not the power plant can already use the banked gas anytime — especially at instances when its required level of generation would go beyond the contracted capacity.

It was noted that on this score, the Malampaya group sounded off reservation, setting out position that until such time that the banked gas is fully paid by 2009, this cannot be considered yet to be belonging to the power producers.

There have been assumptions earlier laid down by the DoE that the banked gas supply may be utilized at tail-end of their contracts or when demand for electricity would be growing at a faster pace.

Any landmark settlement between Spex and the sponsors of Ilijan project (the National Power Corporation at that) is expected to serve as a template in the separate negotiations the developer of the gas field is pursuing with First Gas Power Corporation; which also incurred banked gas obligations because of lowerthan-contract dispatch of its 1,000-megawatt Sta. Rita and 500-MW San Lorenzo power plants in the past 3 to 4 years.

The payment for unused gas supply contracted out for the Sta. Rita and San Lorenzo power plants of First Generation Holdings Corporation was deferred since 2003; because of a pending dispute resolution being sorted out by the parties.

This obligation already accrued to 0 million as of December 2004. In 2003 alone, the amount due was pegged at million; and another million in January 2004; and additional million at that year’s end.

The parties in this case earlier indicated that a deferred payment facility could be extended by the Malampaya consortium; and the usage of the banked gas could be stretched over 10 years; but will only be utilized for needed dispatch of the plants above the minimum energy quantity (MEQ) levels.