Work on First Gen's Philippines Terminal Might Start May (Update)

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Manila-listed First Gen Corporation has submitted an application to Philippines’ energy department to start work on the Batangas LNG terminal project in Batangas City by May this year, it said in a stock exchange notice March 5.

Its wholly-owned subsidiary, Fgen LNG, has filed the application for a permit to construct, expand, rehabilitate and modify (PCERM) its existing jetty with the department of energy. A PCERM is required by the Philippine Downstream Natural Gas Regulation (PDNGR).

Once work on the jetty is complete, it will be able to receive large and small-scale LNG vessels as well as the present traffic of liquid fuel tankers, and build an onshore gas receiving facility. “Once completed, the project will allow First Gen to be able to bring in a floating storage and regasification unit (FSRU) on an interim basis and thus accelerate FGEN LNG’s ability to introduce LNG to the Philippines,” it said.

FGEN LNG hopes to be able to start work as early as May, with first LNG arriving as early as Q3 of 2022, First Gen said. Ultimately it hopes to have a $1bn onshore regasification terminal operating, but it is not planning a final investment decision until 2024.

“This innovation can readily serve the natural gas requirements of existing and future gas-fired power plants of third parties and FGEN LNG affiliates,” the project sponsor-firm said.

In December 2018, Japanese utility, Tokyo Gas, signed an agreement with First Gen to develop an LNG receiving terminal in the country. Tokyo Gas has a 20% stake in FGEN LNG. In September last year, First Gen picked Japan’s JGC Corporation for the engineering, procurement and construction (EPC) work for the project.

The company stated that the project, and the early entry of LNG, will play a critical role in ensuring the energy security of the Luzon grid and the Philippines. The offshore Malampaya gas field is declining and gas supplies for the country’s power plants are looking ever less reliable.

First Gen has about 2 GW generating capacity from four operating gas assets – the 1-GW Santa Rita plant, the 500-MW San Lorenzo plant, the 414-MW San Gabriel plant and the 97-MW Avion plant – all of which depend  on Malampaya's gas, whose gas sales contract expires in 2024. They are all at Batangas City.

Also needing a gas supply is the 1.2-GW Ilijan gas-fired power plant, operated by Korea Electric Power Corporation but due to be turned over to Philippine conglomerate San Miguel Corporation in July 2022. The facility’s gas sales and purchase agreement is set to expire early that year.