TO secure supply for its expanding portfolio of gas-fired power plants, Lopez-led First Gen Corp has started scouting for local and foreign partners for the construction of its $1-billion liquefied natural gas (LNG) import terminal in Batangas.
First Gen president Francis Giles Puno said they are already studying an option to build their own terminal, hiring top advisers to look at the sites and oversee the selection process.
Puno said the LNG facility will supply natural gas to its power plants located in Batangas.
“We have already a detailed design of the LNG terminal and the only thing we need to do next is to bid it out,” he said
After the bidding, the company will solicit proposals from interested parties, which in turn will be their basis to decide whether to pursue the project.
He said the facility, which is expected to be operational in 2020, will be adjacent to the company’s gas-fired power plants Sta. Rita and San Lorenzo, with a combined generating capacity of 1,500MW.
The company is also constructing two more natural gas plants — the 97MW Avion open cycle natural gas-fired power plant and the 414MW San Gabriel plant. They will initially run on natural gas produced from the Malampaya field off southwestern Palawan.
“We spent a lot of time determining whether there is feasibility in locating an LNG terminal adjacent to our power plants,” Puno told a Natural Gas Summit in Makati City.
In actively pushing for the project, Puno said the LNG terminal is part of the company’s back-up plan in case the Malampaya gas supply decelerates. The government has said that Malampaya’s output may run out by 2024.
The Malampaya natural gas field, which was discovered in 1992, helps generate 2,700 megawatts (MW) of electricity and accounts for about 40 percent of Luzon’s power requirements.
Puno also said First Gen’s current gas supply contracts from Malampaya will expire in about 10 years’ time.
“We have roughly 10 years until 2024 when our Malampaya contract will end and if there is no feasible option, then we have no choice but to build our own LNG terminal,” he added.
First Gen is looking at a combination of debt and equity to finance both the LNG terminal and some $1 billion investments in new gas-fired power plants, Puno said.
Alongside the planned construction of an LNG terminal, Puno said
they have also started looking at possible suppliers and are very excited about the gas business.
“LNG is the most viable option to ensure a cleaner and sustainable fuel mix for the country,” he added.
Meanwhile, First Philippine Holdings Corp. (FPHC), the parent firm of First Gen, has allocated P14.5 billion for its liquefied natural gas (LNG) project in Batangas.
In a disclosure to the Philippine Stock Exchange (PSE), the FPHC said the allocation was approved by its board of directors.
At the same time, the FPHC Board also approved the allocation of P4.9 billion as debt service as well as P2.6 billion for a share buyback and P1.2 billion for general corporate purposes.