FIRST GEN Corp. is in talks with various gas suppliers and buyers, following its announcement that it has chosen Japan’s JGC Corp. as its engineering, procurement and construction (EPC) contractor for its liquefied natural gas (LNG) terminal project in Batangas City.
Jonathan C. Russell, First Gen executive vice president and chief commercial officer, said the Lopez-led firm is discussing short-term supply contracts for the period 2021-2023.
“We’re in the process of having that discussion right now; we’re just trying to figure out which will be the most competitive supplier. We’re talking to all of the main LNG supply companies, portfolio players, national oil companies and even traders. We’re just trying to find which of those entities can provide a supply which is most fitting with the Philippines’s needs as a new buyer, especially maximizing flexibility,” he said at the Powertrends 2019 event held in Pasay City.
The plan is to modify First Gen’s existing jetty to enable LNG to be brought in via a Floating Storage Regasification Unit (FSRU) on an interim basis during the term of President Duterte.
An FSRU is an LNG storage ship that has an onboard regasification plant capable of returning LNG back into a gaseous state. This can then be supplied directly to some or all of FGEN’s existing power plants that currently source gas from the Malampaya gas field.
First Gen already operates four gas-fed power plants with an aggregate capacity of about 2,000 megawatts. These are the 1,000-MW Santa Rita, 500-MW San Lorenzo, 414-MW San Gabriel and 97-MW Avion.
The gas contracts inked between the Malampaya consortium and gas power plants will expire in 2021. Thus, the gas plants must look for other sources before their contract expires. The gas from Malampaya is also expected to be depleted starting 2022.
Russell said that First Gen is also in talks with “entities involved in Ilijan” plant, another gas plant that feeds from the Malampaya gas facility.
“We have spoken with the entities involved in Ilijan and I think there’s an open mind because Ilijan will need a gas supply. Of course, they have their own options. We wouldn’t presume anything. They’re free to make their own choices. But once we bring in the means to bring in LNG to the Philippines, it is obviously an option for them and the nice thing is it is already connected via the existing pipeline so the supply would be easy to arrange,” said Russell.
Ilijan’s contract with the Malampaya consortium ends in 2022.
Russell also talked about the possibility of expanding its gas presence to other parts of the country, not just Luzon, via small-scale LNG projects.
“So we’re excited with the idea of small-scale LNG. We want to be able to bring it in other parts of Luzon, also other islands in Visayas and Mindanao. We think there should be quite a lot of options to expand in the future but we need to start somewhere. We have to start with bringing it in. The only other choice is coal, which I think is a bad choice for the Philippines,” he said.
First Gen, through its unit FGEN LNG Corp., recently broke ground on its LNG terminal at the First Gen Clean Energy Complex in barangays Santa Clara, Santa Rita Aplaya and Bolbok, Batangas City.
First Gen said this project is the most significant energy infrastructure project to be undertaken in the Philippines in more than two decades.