TALKS between Osaka Gas Co. Ltd. of Japan and the Manila Electric Co. (Meralco) for a possible joint venture in a power project involving liquefied natural gas (LNG) would have to take a back seat pending results of their respective feasibility studies.
“We are both doing our own studies. For us, we are looking at our entire portfolio,” said Meralco President Oscar S. Reyes, who added that, until the conduct of the study is finished, any possible partnership would have to wait.
When asked if Osaka was willing to wait until Meralco’s study on LNG is completed, Reyes said, “I don’t know.”
LNG is regasified so it can be distributed through pipelines as natural gas.
The Meralco official recalled the last discussion with Osaka. He said, “So many things are happening” that would impact its investment decision on LNG.
Reyes said the direction toward renewable energy, limited gas sources and huge costs related to LNG infrastructure would have an impact on Meralco’s decision on how to go about the LNG business.
“No. 1. You see the entry renewables. Solar, wind, biomass affect the supply picture and, potentially down the road, storage batteries would also address intermittency issues. The parties will have to be really aware of the significant changes that are happening and be aware of cost of generation,” Reyes said.
Given the concerns raised by the utility company, Reyes said both parties “need to look at these scenarios.”
“We are trying to move together with market reality,” Reyes said, adding that a possible LNG investment may happen in “2020, or further out.”
Initially, the two companies were planning to build a 1,500-megawatt (MW) gas-fired power plant that will include a terminal for the LNG.
A 60:40 venture in favor of Meralco, the LNG project with Osaka Gas is estimated to cost over $2 billion.
Meralco Powergen Corp. (MGen), a unit of Meralco, will undertake the project on behalf of the utility firm should talks with Osaka Gas prosper. Meralco Chairman Manuel V. Pangilinan earlier said the plant is likely to be built in Luzon, where the demand for power is expected to increase.
