LOPEZ-LED First Gen Corp., the country’s second largest producer of electricity, targets to start construction of its $1-billion liquefied natural gas (LNG) terminal either late next year or early 2017 so that it will be ready by 2020 or 2021, before gas reserves in the Malampaya facility run out.
First Gen president Giles Puno said the front-end engineering design (FEED) of the project is now on its second revision.
“So in the revision, what we are doing is fine-tuning the technical details. If you look at the FEED study, you can already build an LNG facility,” he told reporters after the company’s annual stockholders meeting on Wednesday.
He said their focus right now is to attend to the tendering process of the project, which will then be disseminated to potential contractors.
“We hope the LNG facility will come on stream sometime in 2020 to 2021, about three years before the Malampaya depletion, because you just don’t know how reliable the supply of Malampaya gas will be over the next ten years until 2024,” he added.
The company sources its fuel requirements for its two power plants — Sta. Rita and San Lorenzo in Batangas — from the Malampaya natural gas field in offshore Palawan. The Malampaya reserves are expected to last until 2024.
“For us, in a way it is good because we are building more capacity. In that way we can also consider building beyond the San Gabriel [plant]. We have the Sta. Maria [power project]and it needs natural gas,” he said.
In financing the LNG terminal project, Puno said First Gen will shoulder 50 percent of the cost while the remaining half will be offered to other parties.
“We will take 50 percent and the other half will be offered to other parties. It could be a combination of Filipino and foreign parties. The foreign parties will bring in expertise in operating and maintaining the facility,” he said.
Puno said the company expects to announce its partners for the LNG terminal next year.
“What we’ve done is we have actually shortlisted potential contractors. We have a list of contractors that we have shortlisted that are very capable of building a world-class facility,” he said.
He expressed confidence that the contractors can deliver the LNG terminal on time, adding that they could no longer afford to make any delays in its completion.
“So what we have to do is really nail down the permanent facility which is the LNG import terminal,” he added.
Meanwhile, Emmanuel Singson, First Gen chief finance officer (CFO), said the company’s income for the year is expected to be flat.
“This is because the Avion plant is still coming in, probably by the second half, and that is very small and we also have pre-operating expenses,” he said.
Puno explained that the company needs to spend more for the development of projects, thus reducing their income.
“If you look at our operating expenses, it’s very high because we are spending on development costs which we cannot capitalize so it reduces our effective net income,” said Puno.
He said this would pay off once the company starts the commercial operation of its Avion and San Gabriel power plants, which will have a combined capacity of 500 megawatts (MW) next year.