SMC open to partnership with First Gen for LNG hub

SMC President and Chief Operating Officer Ramon Ang (CNN Philippines)

CONGLOMERATE San Miguel Corp. (SMC) is open to the possibility of partnering with Lopez-led First Gen Corp. to pursue both firms’ interest to venture into liquefied petroleum gas (LNG).

There are “a lot of options” on the table, SMC President Ramon Ang said, including a possible partnership with First Gen, which said last week it would bring in at least one foreign partner and potential local partners. The Lopez-led firm does not mind keeping a minority interest in the planned LNG terminal.

“We have a lot of options. First Gen and SMC are close so there is no problem…There is no problem if they will put up and we join them; then, we buy from them. No problem,” said Ang, who added he has not discussed this yet with the Lopez group.

When asked if it is also an option for SMC to put up an LNG terminal on its own, Ang said it is possible.

“Yes, we can. We can also partner with First Gen,” he added.

Ang was also asked which options he prefers. “It’s the same,” he replied.

Ang disclosed plans to retain the 1,200-megawatt (MW) Ilijan gas-fired power plant in Batangas once the build-operate-transfer (BOT) contract with the government expires in 2020. After the end of the facility’s BOT deal, the plant will have to be turned over to the designated independent power-producer administrator (Ippa).

SMC subsidiary South Premiere Power Corp. (SPPC) is the Ippa for the Ilijan plant. It trades the plant’s capacity.

“We will retain Ilijan as gas and we may even expand that. A viable floating terminal or regas should be at least 3,000 MW,” Ang said.

He added from Ilijan’s current capacity of 1,200 MW, the asset could easily be expanded by 1,800 MW.

“We already bought the land beside it so it will be easy for us to expand it to become 3,000 MW or more,” Ang said.

First Gen officials said early this month the company’s goal is to finalize partnerships and seal engineering, procurement and construction (EPC) contracts within the year.

“We don’t mind a strong minority. It does not have to be 60 percent. We have to bring in partners who will really feel they have skin in the game. They will really need a material ownership into these assets before they proceed,” First Gen President Francis Giles Puno earlier said.

The planned LNG terminal, which will have a capacity to supply a minimum 5 million tons of natural gas equivalent to 5,000 MW, is targeted for construction next year. It is envisioned the $1-billion facility will be finished in four years.

It will be located within the Lopez Group’s clean-energy complex which houses the 1,000-MW Santa Rita, 500-MW San Lorenzo, San Gabriel and 97-MW Avion gas plants.

“We’ve been proactively developing it in the last five years. In the case of government, there are two discussions. One is with PNOC [Philippine National Oil Co.] and one is with the Department of Energy [DOE]. My understanding of the process [is that] the DOE is actually the overseer of making sure there’s coordination. One option that’s being created is that of the PNOC which has had independent discussions with various parties,” Puno said.

“The process we’re going through is really with the DOE to say we are really presenting to them the option we have created that is located in the First Gen Clean Energy Complex in Batangas. It’s our own,” he added.

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She studied at Letran College. Named the Best Telecommunications and Energy reporter by Ejap in the past years; also received an award for best feature story.