FIRST GEN Corp. is planning to invite diversified conglomerate San Miguel Corp. “within the year” to participate in its $1.2-billion liquefied natural gas (LNG) import facility, company officials said on Monday.
“We’re very open… especially because they’re also one of the big users of natural gas with Ilijan so their participation in an LNG import scheme would be very very welcome,” First Gen Chairman and Chief Executive Officer Federico R. Lopez told reporters.
“In fact, the LNG terminal is very subject to economies of scale, so the more that use it, the cheaper it becomes for everyone and the easier it is to bring power costs down,” he added.
Francis Giles B. Puno, First Gen president and chief operating officer, said an invitation to SMC should be firmed up soon because of the latter’s pressing need for natural gas.
“It has to be within the year… I think he (San Miguel President and Chief Operating Officer Ramon S. Ang) mentioned that we have good relationship with First Gen. We also feel that we have good relationship with San Miguel,” he said.
Mr. Puno said First Gen had been in discussion with a number of parties for the LNG project.
“With respect to San Miguel obviously it’s a discussion that we would welcome as well principally because of the Ilijan asset,” he said, referring to the gas-fired plant
SMC looks after the 1,200-megawatt (MW) Ilijan power plant, which sits on a 60-acre site at Arenas Point, Barangay Ilijan, Batangas City. It was appointed in 2010 as the independent power producer administrator of the plant by state-led Power Sector Assets and Liabilities Management Corp.
First Gen continues to prepare for a post-Malampaya gas era with the setting up the country’s first LNG regasification terminal to be located at its clean energy complex in Batangas City.
The listed company has a portfolio of gas-fired power plants with a combined capacity of 2,017 MW as of 2017. It wants to complete the LNG facility in time for the expected depletion of the Malampaya field starting in 2024.
“Ilijan will be running out of gas actually sooner than that of Santa Rita and San Lorenzo,” Mr. Puno said, comparing the company’s two gas-fired power plants to that of San Miguel’s.
He said he is aware of Mr. Ang’s flexibility either to be an owner or buyer of gas from the proposed LNG facility.
“It’s a big investment. It’s about $1.2 billion and because it is such, our view is that as long as we have a significant stake — and that could be as low as 50%, 40% — then we have the balance to give to other strategic investors,” Mr. Puno said.
The comments of the First Gen officials come after Mr. Ang said earlier this month that San Miguel was open to partnering with First Gen Corp. in any form of ownership sharing arrangement in the latter’s plan to build an LNG terminal.
He said his group and First Gen “are quite close, so there’s no problem” if either one of them takes the controlling stake.
He also said the Ilijan plant could easily be expanded by 1,800 MW to reach a capacity of 3,000, ensuring an offtaker for the imported LNG.
Imported natural gas is liquefied for ease of shipping, then regasified or reverted to its former state in the country of destination. — Victor V. Saulon