THE current low prices of liquefied natural gas (LNG) in the world market are favorable for the Philippines as a future buyer of the imported fuel, an official of Lopez-led First Gen Corp. said.
“International LNG and oil prices are now at very low levels which bodes well for the Philippines as a potential new importer of LNG which can initially complement, and eventually replace, natural gas from the Malampaya field,” First Gen Executive Vice President Jonathan C. Russell told BusinessWorld.
Economic shutdowns caused by the global coronavirus disease 2019 (COVID-19) pandemic have lowered demand for oil and gas, causing an oversupply, along with a steep decline in prices.
In its recent outlook report, Moody’s Investor Service said that the current supply glut of North American natural gas will continue to strain prices from June to August.
However, it is seeing that prices in Henry Hub, a crucial benchmark for natural gas prices, will recover between $2.00-$3.00 per million British thermal units in December to early 2021, citing production cuts.
The Philippines has identified LNG imports as a substitute for its depleting indigenous source of natural gas. The country’s lone natural gas producer, Malampaya deepwater gas-to-power project, is expected to be nearly depleted by 2027, according to the Department of Energy (DoE).
Various firms have submitted their proposals for LNG regasification facilities. Among these is FGen LNG Corp., a unit of First Gen.
On March 4, it filed to the Department of Energy an application for a regulatory permit for the construction of its offshore terminal for LNG within its energy complex in Batangas City.
The project, once completed, will bring in an interim floating storage and regasification unit (FSRU), which will hasten the introduction of imported fuel to the Philippines.
The country has yet to enter any LNG supply contracts from producers abroad.
The listed firm had said that upon the issuance of its regulatory permit, it might start the project as early as this month so it could receive imported LNG by the third quarter of 2022.
Yet, due to the prevailing public health crisis spurred by the global pandemic, the company is seeing that the permit may come in later.
“We understand that the PCERM (permit to construct, expand, rehabilitate and modify) application is currently in the process of being reviewed by the DoE, but given the circumstances that prevail, it is quite right that the DoE should focus its efforts on much more important and pressing issues brought about by the COVID-19 situation and to ensure the continued and uninterrupted supply of electricity to consumers,” Mr. Russell said.
The First Gen subsidiary is now preparing plans for the upcoming construction of its LNG terminal soon after the crisis subsides and when conditions would allow construction activities to be done safely.
The DoE earlier declared First Gen’s LNG terminal as an “Energy Project of National Significance” under Executive Order No. 30, allowing it to enjoy faster permitting from government agencies.
Other LNG-related projects which have been given notices to proceed by the government are the gas-to-power projects by the Lucio Tan Group and another by the Australian firm Energy World Corp.
On Wednesday, shares in First Gen inched up 0.97% to close at P18.80 each. — Adam J. Ang