First Gen Corp., the largest provider of gas-fired power in the Philippines, has received the go-ahead from the Filipino Department of Energy to develop its proposed interim floating LNG facility in the port area of Batangas City as it awaits construction of a permanent onshore terminal.
First Gen said its wholly-owned subsidiary FGEN LNG was given final clearance by the regulators for an application filed in March 2020.
The Filipino utility said it would now start work in the fourth quarter of 2020 on modifying an existing jetty and building onshore gas receiving capability at its complex in Batangas City.
In parallel with the construction phase, FGEN LNG is preparing to issue a binding invitation to tender for a floating storage and regasification unit (FSRU) upon completion of its ongoing non-binding process.
Three FSRU providers, Singapore-based BW Gas, Greek-owned shipping company GasLog LNG and Norway’s Hoegh LNG have expressed interest in concluding a charter agreement for the FSRU that will provide storage and regasification services to the interim project.
FGEN LNG said the deployment of an FSRU would allow the introduction of LNG to the Philippines as early as the third quarter of 2022 to serve the natural gas requirements of existing and future gas-fired power plants of FGEN LNG affiliates as well as third parties.
The company said it believed the project would play a critical role in ensuring the energy security of the northern Philippines and the capital Manila on Luzon island, particularly as the nation’s domestic Malampaya natural gas resources run down just as the gas-fired power plant network begins to expand.
The company has a joint venture with Tokyo Gas in jointly developing the LNG hub in Batangas province to meet the nation’s growing gas-fired power needs.
First Gen and Tokyo Gas held a ground-breaking ceremony 18 months ago for the onshore terminal that has been designated an “Energy Project of National Significance,” in recognition of its importance to national grid security.
The only other completed regasification facility in the Philippines is at Pagbilao in Quezon province where Australia-listed Energy World Corp. has a facility linked to its 100-percent owned 650MW gas-fired power project. LNG imports will only begin when the power plant is built.
“We are thankful to Energy Secretary Alfonso G. Cusi, and to the Downstream Natural Gas Review and Evaluation Committee of the DoE, for the support and guidance that they have provided during the evaluation process,” said First Gen Executive Vice-President and Chief Commercial Officer Jonathan C. Russell.
FGEN LNG believes the project will play a critical role in ensuring the energy security of the Luzon Grid and the Philippines, particularly as the Malampaya gas field is expected to be less reliable in the future.
The company already operates four gas-fired power plants with an aggregate capacity of about 2,000 megawatts.
These are the 1,000-MW Santa Rita plant, the 500-MW San Lorenzo facility and the 414-MW San Gabriel and 97-MW Avion plants.
First Gen said the arrival of LNG in the Philippines would encourage new power plant developments and more industrial and transport users seeking a cleaner replacement for polluting fuels.
The company concluded that it expected the continuing reduction in supply from the Malampaya gas field up to the expiration of contracts in 2024.