First Gen, Tokyo Gas start LNG work in race to beat Malampaya depletion

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Top government officials, led by Energy Secretary Alfonso G. Cusi, join counterparts from First Gen LNG Corporation (FGEN LNG), led by chairman Federico R. Lopez, in opening two casks of sake wine during a traditional Japanese Kagami Biraki ground-breaking ceremony for FGEN LNG’s liquefied natural gas (LNG) terminal project in Batangas City. Also in photo are (from left) Jonathan Russell, First Gen executive vice president and chief commercial officer; Beverley Rose A. Dimacuha, Batangas City mayor; Sen. Sherwin T. Gatchalian, chairman of the Senate Energy Committee; Francis Giles B. Puno, First Gen president and COO; Rep. Lord Allan Q. Velasco, chairman of the House Committee on Energy; Rep. Mario Vittorio A. Marino, Fifth District of Batangas; Hermilando I. Mandanas, Batangas governor; Makoto Iyori, minister for economic affairs of the Embassy of Japan; and Kunio Nohata, Tokyo Gas senior managing executive officer. -- COMPANY HANDOUT

FIRST GEN Corp. broke ground on Tuesday at the site of its liquified natural gas (LNG) terminal in its Clean Energy Complex in Batangas City, which it hopes to get operational before the Malampaya gas field is depleted in 2024.

The project, which is being pursued by the Lopez-led firm through its unit FGEN LNG Corp. in partnership with Japan’s Tokyo Gas Co., Ltd., is expected to be completed in about three years.

“… [W]e want to get (the LNG terminal) finished before Malampaya expires. We’re hoping to get the project finished in 2023,” First Gen Executive Vice-President and Chief Commercial Officer Jonathan C. Russel told reporters after the groundbreaking ceremony at the project site on Tuesday, adding that the company is looking to expand the capacity of its facility in Batangas by building two additional power plants.

“Next to the San Gabriel site, we have two additional vacant lots which can take two more units,” Mr. Russel explained.

“We need to build them by 2023, so ideally we would start them in 2020.”


First Gen operates four gas-fired power plants in Luzon, namely: the 1,000-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.

The company said it is talking to several financial institutions to secure financing for the LNG terminal project, which is priced at around $700 million-1 billion.

“We’re in discussion with a number of financial institutions. But I think we anticipate that we may proceed on the basis of balance sheet financing initially and then look at some kind of take-out financing later on,” Mr. Russel said.

First Gen’s LNG terminal is the first to move forward to construction stage after the government expressed support for LNG as a key to secure the country’s energy resource.

It will occupy approximately 21 hectares of land within the Clean Energy Complex of First Gen in Batangas City, and will include facilities for unloading LNG carriers and an LNG storage tank.

Aside from First Gen, Dennis A. Uy’s Phoenix Petroleum Philippines, Inc. and partner China National Offshore Oil Corp. (CNOOC) also have a notice to proceed from the Department of Energy (DoE) to pursue an LNG terminal in Batangas.

Energy Secretary Alfonso G. Cusi said the First Gen-Tokyo Gas project is “putting the Philippines in the value chain of LNG.”

“We are acting as a de facto transshipment point for gas that is going to China… Now, we are closer to the realization of this project… the country now will become part of the LNG value chain because we can receive and export gas.”

First Gen President and Chief Operating Officer Francis Giles B. Puno noted that once the company’s LNG terminal is completed, it will be open to other users.

“We want to make it clear: we’re not building a terminal just for our purpose… Essentially, this terminal is meant to be able to expand gas usage not only for First Gen but for other users,” Mr. Puno told reporters.

First Gen Chairman and Chief Executive Officer Federico R. Lopez told reporters separately: “We’d like to keep moving ahead… to really make sure natural gas, which is really the best option for us in the transition to a decarbonized world, [is available]…” — Denise A. Valdez