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First Gen wants to get more partners for LNG terminal project

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FIRST Gen Corp. Chairman and CEO Federico R. Lopez (fifth from left) is reelected to the company’s board during the annual stockholders’ meeting on Wednesday. Also in photo are (from left) Francis Giles B. Puno, who is concurrent company president and COO, Jaime I. Ayala, Alicia Rita L. Morales,  Eugenio L. Lopez III, Peter D. Garrucho, Jr., Cielito F. Habito and Richard B. Tantoco. — COMPANY HANDOUT

By Victor V. Saulon, Sub-Editor

FIRST GEN Corp. is looking to bring in more partners for its liquefied natural gas (LNG) terminal project as it schedules to break ground by month’s end and targets to make a final investment decision by early 2020 in time for a 2024 completion date.

“We aim to finalize the financing for the project and execute the relevant key project agreements, including LNG supply and firm up our strategic partners for the project,” Francis Giles B. Puno, First Gen president and chief operating officer, told stockholders during their annual meeting on Wednesday.

“In fact, we are going to have our formal groundbreaking at the end of the month,” he added.

Mr. Puno said the existing partnership with Tokyo Gas Co., Ltd., which was forged in December last year, will proceed with the project ahead of a final investment decision (FID).

“We anticipate that we’ll bring in more partners, but in the meantime between ourselves and Tokyo Gas, we want to proceed already. So the formal FID will entail a bigger, hopefully a complete group of owners,” he told reporters, adding that a new investor could be a Filipino entity.




He said the LNG terminal could be completed in four years, and that the existing partners do not intend to underwrite the $1-billion project cost.

“In our case, probably right now we have 80%, Tokyo Gas has 20%. We don’t intend to own the whole 80%, so it can go down to 50%, 51%, so that’s the flexibility,” he said.

Jonathan C. Russel, First Gen executive vice-president and chief commercial officer, said a number of nationalities had expressed “a great deal of interest” in the project. He said the partnership talks include those with potential fuel suppliers.

“I can’t give you any names, but we are in advanced discussions with a number of entities, so it’s possible that in the near future, we’ll announce additional partners that are coming in,” he said. “Within the next few months, we may have additional announcements.”

“We can accommodate more than one partner. It’s just a question of trying to choose partners that add the most value and also will be easy for us to work as a group, good chemistry and a strong combination,” Mr. Russel said.

In the meantime, First Gen is setting aside up to $250 million for this year’s capital expenditure, most of which will be used by subsidiary Energy Development Corp. (EDC).

“For consolidated [capex], it’s about $220 to $230 [million], bulk of that will be with EDC, it’s about $150 [million], then the rest would be with gas,” Emmanuel P. Singson, First Gen Corp. senior vice-president and chief financial officer, said.

However, EDC President and Chief Operating Officer Richard B. Tantoco said the consolidated amount could reach $250 million to include additional budget for a geothermal-related project.

“Some of it will be for projects, and then some of it will be for things that we’ll do in the power plant like cooling tower upgrades,” he said. “So it’s investments that will optimize the assets’ flexibility.”

Last year, the group’s consolidated capex was $100 million, Mr. Singson said.

On Wednesday, shares in First Gen slipped by 5.88% to close at P20 each.