First Gen unit eyes to start LNG terminal construction in May

Lopez-led First Gen Corp.’s wholly-owned unit FGEN LNG Corp. aims to start the construction of a Liquefied Natural Gas terminal in its Batangas City complex in May.

In a disclosure with the Philippine Stock Exchange on Thursday, First Gen said FGEN LNG has already filed its application for a Permit to Construct, Expand, Rehabilitate and Modify (PCERM) with the Department of Energy.

A PCERM is required by the Philippine Downstream Natural Gas Regulation (PDNGR).

Likewise, the permit, the firm said, is in compliance with the conditions of the Notice to Proceed granted by the Energy department in March 2019 for the LNG terminal project.

FGEN LNG’s PCERM application is for the construction of an Interim Offshore LNG Terminal within the First Gen Clean Energy Complex in Batangas City, consisting of construction works necessary to modify First Gen’s existing liquid fuel jetty, making it suitable for multiple uses.

Once modified, the facility could accommodate large- and small-scale LNG vessels, as well vessels for liquid fuel.  Ehancing the LNG terminal also covers the construction of an adjunct onshore gas receiving facility, First Gen said.

DOE's nod of the PCERM would allow First Gen-LNG to start construction of the project in May, “in order to be able to receive LNG as early as third quarter of 2022.”

Once completed, it will allow FGEN LNG to “bring in a Floating Storage & Regasification Unit (FSRU) on an interim basis and thus accelerate FGEN LNG’s ability to introduce LNG to the Philippines.”

“This innovation can readily serve the natural gas requirements of existing and future gas-fired power plants of third parties and FGEN LNG affiliates, and bring the country closer to its goals of energy security, expanded energy access and low-carbon future, which are among the stated objectives of the Philippine Energy Plan 2017-2040,” the First Gen said.

An FSRU is LNG storage ship that has an onboard regasification plant capable of returning LNG back into a gaseous state.

The project as well as the early entry of LNG are seen to play a critical role in ensuring the energy security of the Luzon Grid and the Philippines, particularly as the indigenous Malampaya gas resource is expected to be less reliable in producing and providing sufficient fuel supply for the country’s existing gas-fired power plants, and even less so for additional gas-fired power plants, according to First Gen.

In May, First Gen and its Japanese partner Tokyo Gas Co. Ltd. broke ground for the LNG terminal project in Batangas City.

The DOE is pushing for an LNG terminal facility to avoid a spike in consumer electricity rates once the Malampaya natural gas reserves are depleted.

The Malampaya gas-to-power facility fuels three gas-fired power plants with a total generating capacity of 2,700 megawatts (MW)—providing up to 30% of the power generation needs of Luzon.

Connected to onshore gas plants in Batangas, the Malampaya offshore facility in Northern Palawan was inaugurated in 2001.

Estimates show its gas reserves is sufficient from 2022 to 2024.

“The entry of LNG will encourage new gas-fired power plant developments, as well as industrial and transport industries to consider it as a replacement to more costly and polluting fuels,” First Gen said.

“The project represents the initial phase of the FGEN Batangas LNG Terminal which was previously declared by the Energy Investment Coordinating Council (EICC) through the DOE as an ‘Energy Project of National Significance’ (EPNS) under Executive Order No. 30,” it added. —LBG, GMA News