First Gen races against time to build $1-B crucial LNG hub
First Gen Corp. expects to break ground by the end of May a $1-billion liquefied natural gas (LNG) terminal in Batangas, which will also be its Japanese partner’s first facility outside its home country.
First Gen president Francis Giles Puno said in a press briefing the project would begin even if the Lopez-led firm and Tokyo Corp. were still in talks with additional partners.
“We are focused on working to achieve a final investment decision by early 2020 for the LNG terminal,” Puno said. “Even then, First Gen and Tokyo Gas—between the two of them—want to start early.”
He said First Gen had an 80-percent participating interest in the project, with Tokyo Gas holding the remaining 20 percent. He said, however, First Gen was willing to scale down to a 50-percent stake to lessen its exposure and accommodate more partners.
A contract for engineering, procurement and construction is also expected to be finalized “within the next couple of months,” according to First Gen chief commercial officer Jonathan Russell, who is in charge of LNG project.
Puno said the site for the LNG facility, which is near First Gen’s gas-fired power plants in Batangas, was “well-prepared” and additional preparations could be prefunded through equity.
First Gen, which has a portfolio of gas-fired generators with a total capacity of 2,017 megawatts, currently relies on fuel from the Malampaya project—the contract for which will expire in 2024.
First Gen’s LNG facility will take four years to build in time for the expiration of the Malampaya franchise. Building the LNG terminal will ensure fuel for the power plants, whether or not Malampaya will continue to produce beyond 2024.
Russel said there would be no energy security for the Philippines with respect to natural gas without an LNG terminal, irrespective of whether there would be more supply from Malampaya or if a new gas field would be discovered and developed in the Philippines.
LNG imports could also complement the local supply, Russel said. In the absence of indigenous sources, imported fuel would ensure the power plants could continue to supply electricity to its customers, mainly Manila Electric Co.
Company officials insisted natural gas-based electricity could compete with coal-based power in terms of price.
