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First Gen starts building $1-B LNG import terminal

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By Myrna M. Velasco

BATANGAS CITY – With an investment of US$1.0 billion to be spread over 3-4 years, the 5.0 million tons per annum (mtpa) liquefied natural gas (LNG) import terminal of Lopez-owned First Gen Corporation will consequentially mark the rebirth of the country’s gas sector post the commercial phase of the Malampaya field.

First Gen logo

Following the FGen LNG project’s groundbreaking yesterday, First Gen Chairman and CEO Federico R. Lopez asserted that “we’d like to keep moving ahead for the country.”

For the company, that is about setting gold stamp and making sure “that natural gas which is the next option for us to transition to a decarbonized world is really the best power source that can keep the lights on into a transition to renewables.”

Lopez added the LNG terminal that will then provide the fuel needs of future gas-fired plants is also about ensuring that when the future grid expands, “It will definitely need a lot of flexible plants and natural gas fits that role to a T.”

In tandem with the LNG import facility, First Gen is likewise moving forward with its two new power projects that will add 1,200-megawatt capacity to the grid – with the plants prospectively reaching commercial stream by year 2023.

According to Jon Russell, First Gen executive vice president and chief commercial officer, the company will also be advancing the solicitation of tenders for the engineering, procurement and construction (EPC) contract of the two power plant facilities – the Santa Maria and Saint Joseph generating assets — that will have 600MW capacity each and may require aggregate investment of US$1.2 billion.

He said three of the giant EPC players in the gas and power space are in their shortlist – namely Siemens A.G, of Germany; American energy giant GE; and Japan’s Mitsubishi Heavy Industries.

For First Gen’s partner in the LNG import facility, the groundbreaking rites had been “a significant breakthrough” leading to the project’s implementation and a step closer to them reaching final investment decision (FID) as targeted either end of the year or early part of 2020.

“We still have not gotten FID, but this kind of ceremony, it’s actually a very great milestone and I’m very happy to come here to join this,” Tokyo Gas Senior Managing Executive Officer Kunio Nohata said.

He qualified that the Japanese firm has been eyeing several LNG projects in the Southeast Asian region as expansion ventures – including those in Vietnam, Indonesia and Thailand, but it is the Philippine venture that had moved headway than the rest.

“This project is ahead – basically LNG project takes time – there are a lot of parameters to be thought out –there’s technical, there’s also procurement side and demand-side and site selection and financing, so it takes time,” he explained.

For the FGEN LNG joint venture, Nohata indicated “we’d like to use our expertise and experience in developing LNG. We also would like to supply LNG to this project because this project comes at a perfect timing.”

On the pricing of LNG, Lopez further indicated that linking the cost of gas to coal will make it a competitive option for the Filipino consumers.

“They have groundbreaking terms and it’s never been seen in LNG contracting which is very strong indicator that suppliers are very, very aggressive,” he said, relating to the coal-indexed price of LNG that could eventually be utilized in gas-fed generating plants.

First Gen President and COO Francis Giles B, Puno added that the import facility will not just cater to the need of the company’s owned gas plants, but also of other power players in the industry as well as across segments like the transport and industrial sectors.

“We’re not building that terminal just for our purpose. In fact, it’s built so that it can deliver 5 million tons which is equivalent to 5MW of baseload. Right now, we only have 3,200MW, so essentially this terminal is meant to be able to expand gas usage, not only for First Gen but for other users. Sometimes the argument is there’s no choice because there’s no gas, so once the terminal is built, then there is a choice,” he stressed.

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