First Gen considering natural gas importation

The Lopez-led First Gen Corp. is looking at importing natural gas from new sources abroad not only to ensure continued and stable operations of its 1,500-megawatt gas-fired power plants in Batangas but also to enable the company to pursue its 300-MW San Gabriel expansion project.

The move will, however, entail “massive but necessary investments,” as gas importation will require the setting up of a terminal, First Gen president Francis Giles Puno said.

It is critical for First Gen to start scouting for prospective LNG sources as the contracts of its 1,000-MW Sta. Rita and 500-MW San Lorenzo gas plants with the consortium operating the Malampaya gas field off Palawan are expiring in 2024, Puno said. Both have supply contracts with Manila Electric Co. up to 2026.

“We have to be certain that there’s more gas in Malampaya or we should have a new contract for replacement gas maybe five years before the expiration of the existing contract,” he said.

It was necessary to start looking for prospective gas suppliers now as global demand for this resource has been rising steadily. Natural gas is deemed as among the more feasible alternative sources of energy and fuel.

Countries like Brunei and Australia earlier announced that they had existing gas supply contracts booked for the next several years and can only start supplying the Philippines with natural gas by 2015 and 2016, respectively.

Puno said it was the lack of additional sources of gas within the country that had hampered the company’s expansion plans, including the establishment of a third power facility.

“What I understand is there’s more gas available from Malampaya, so we’re talking to the Department of Energy and Shell Philippines Exploration BV (SPEX) regarding our San Gabriel expansion. It is uncertain what they want to do with their excess gas—whether they’re going to bid it out or enter into an agreement with buyers,” he said.

“There’s a need for more investments in power generation but we are constrained by gas availability. Unlike in the case of coal, which can easily be imported from Indonesia and Australia,” Puno said.

The proposed San Gabriel natural gas power plant, which is being eyed to generate between 300 and 550 MW, has always been there and ready for implementation, he said.