FIRST GEN Corp. has not ended its search for partners for its planned liquefied natural gas (LNG) terminal after the signing of a joint development agreement (JDA) with Tokyo Gas Co., Ltd., a company official said.
“It has always been our plan to bring in third-party investors. It’s just that this is the first. We’ve been in discussion with many different potential partners. We’ve been in discussion with Tokyo Gas for a long time and it’s only now we’ve worked out all of the issues between us,” Jonathan C. Russel, First Gen executive vice-president, said in a chance interview.
First Gen signed on Wednesday a JDA with Tokyo Gas to pursue the joint development of an LNG terminal at the Lopez-led company’s Batangas Clean Energy Complex.
“Between us — both Tokyo Gas and First Gen — we’re actually hopeful that we will bring in additional investors, other people that bring different skills to the table,” Mr. Russel said.
First Gen operates gas-powered plants in Luzon, namely: the 1,000-megawatt (MW) Santa Rita power plant, the 500-MW San Lorenzo power plant, the 414-MW San Gabriel power plant and the 97-MW Avion power plant.
“We have 2,000 MW of existing capacity that we own. There’s another 1,200 MW potentially from Ilijan. And then we’re looking at further expansion, potentially another 1,000 MW. So between those, and depending [on whether] they run at baseload or midmerit, we’re looking at probably an initial supply of 3 going up to 5 million tons per annum (MTPA),” he said.
Mr. Russel estimated the total investment in the LNG terminal to reach between $700 million to $1 billion. He said equity funding will come from First Gen, Tokyo Gas and “hopefully” from other partners.
“The financing depends on how the project is ultimately structured. So we still got work to do to finalize the entire structure, but our intention is to bring in a mixture of international and local banks to finance the project,” Mr. Russel said.
The First Gen-Tokyo Gas deal comes after recent pronouncements from the government describing LNG as vital to ensuring the country’s energy security once the Malampaya gas field, which fuels the company’s plants, is depleted.
Tokyo Gas will take a 20% participating interest in the LNG project and provide support in development work to achieve a final investment decision. Upon reaching that decision under the JDA, the parties will enter into a definitive agreement to proceed with the construction of the project, First Gen said.
Mr. Russel said First Gen continues to look for partners with “experience in developing LNG, experience in developing similar projects, additional skills that we might not have.”
He said a number of foreign companies had expressed “considerable interest in working with us in the Philippines and so we need to focus on those discussions.”
For the LNG terminal, First Gen is looking at supplying to both existing and future power plants, “but also hopefully other power markets outside of Luzon and even non-power markets.”
“We’re installing the ability to fill up trucks loaded with LNG which can transport even within Luzon, for example to the industrial parks. And then also you can use smaller vessels to transport to Visayas and Mindanao. That’s quite exciting,” Mr. Russel added. — Victor V. Saulon