Gas policy sets stage for LNG terminal bids

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Philippines’ LNG imports seen rising as maritime dispute thwarts exploration

THE Department of Energy (DoE) on Tuesday outlined its policy for the downstream natural gas industry, a strategy for making the Philippines a regional hub for the fossil fuel, which includes plans for a $2-billion liquefied natural gas (LNG) terminal.

“That would guide everybody including PNOC (Philippine National Oil Co.)… to operate an LNG  terminal,” DoE Secretary Alfonso G. Cusi told reporters at the ceremonial signing of Department Circular 2017-11-0012 or the “Rules and Regulations Governing the Philippine Downstream Natural Gas Industry.”

He said the circular is needed ahead of the construction next year of the integrated LNG facility. Many companies that are keen on participating in the project have been awaiting the issuance of the rules before firming up their plans.

“It takes two and a half years to make it [LNG terminal] operational from the time the project starts,” he said.

He said the project should be completed before the expected depletion of the Malampaya offshore gas find near Palawan island in 2024.

“But we will not wait for that. We need that in place in three years’ time,” he said.

He said local and foreign project proponents have approached PNOC to partner with the DoE’s commercial arm in the project.

Separately, DoE Undersecretary Donato D. Marcos said under the rules, PNOC or its unit PNOC Exploration Corp. (PNOC-EC) may acquire at least a 10% stake in the LNG project, which will house a storage, regasification and a power plant.

He placed the facility’s cost at around $2 billion and its eventual capacity at five million metric ton per annum.

“We’ve finished. We have complied with all the policy regulations, it’s up to them (PNOC) to find a partner,” Mr. Cusi said.

But he said foreign entities that submit proposals directly to the DoE will still be referred to PNOC or PNOC-EC for a possible partnership.

“They are choosing a partner to move their project forward. So that is complying with the policy that we have crafted,” he said, adding that three proposals from foreign groups are being evaluated by PNOC.

Mr. Marcos said the LNG terminal’s power plant component can be 100% owned by foreigners, although the public utility component is subject to the constitutional limitation of 40% foreign ownership.

“That’s why the permit is for the third-party access,” Mr. Marcos said.

Under the rules, excess capacity of the LNG terminal, transmission system, distribution system and other services offered by the operator should be made available on a transparent and non-discriminatory basis to third-party users. — Victor V. Saulon