Cusi to pitch for LNG investments in ASEAN Energy Ministers’ meet

By Myrna M. Velasco – October 28, 2018, 10:00 PM
from Manila Bulletin

Capital enticement for liquefied natural gas (LNG) facilities in the country will be the focus of investment-invitations that Energy Secretary Alfonso G. Cusi will be pitching for at the 36th ASEAN Ministers on Energy Meeting (AMEM) in Singapore this week.

The energy chief said he would apprise minister-peers and participant-investors on the country’s energy supply chain and on what the Philippines would need when it comes to gas investments, especially near-term Liquefied natural gas (LNG) facilities.

Cusi will focus on “encouraging natural gas companies in the ASEAN to invest in the Philippines LNG hub terminal project in anticipation of the Malampaya gas field’s depletion by 2022.”

Tough contest is certainly brewing among interested parties in setting up the country’s LNG import terminal – be it on the side of the government via state-run Philippine National Oil Company (PNOC) or the private investors.

The Department of Energy (DOE) has instituted the framework on the anticipated entry of LNG ventures – and that serves as the guidepost for investments, chiefly in the proposed LNG terminal that will cater to the future gas needs of the country.

PNOC, for its part, is soliciting tenders for its own strategic partner on planned installation of a floating storage regasification unit (FSRU) that shall have capacity of about 3.0 million tons per annum. The scale of investment casts for that had been from US$600 million to US$1.4 billion. Leading gas industry player First Gen Corporation of the Lopez group has likewise been cementing partnerships with targeted foreign-company players on its onshore LNG import facility with a capacity of up to 5.0 million tons per annum.

Just last week, the biggest development had been the announcement of Phoenix Petroleum Philippines, Inc. of businessman Dennis Uy, a known friend of President Duterte, that it has been giving preference to the Pangilinan group as its co-venturer on its proposed LNG import facility and power plant projects along with that of China National Offshore Oil Corporation.

The party that will be cornering Pangilinan’s group is seen gaining the upper hand because that may entail secured market or power supply agreement for the gas-fired power plants that will eventually be catered to by their LNG terminal.

But if gauged on the gas industry rules set forth by the DOE, the winning investor-group that shall build the country’s LNG import terminal project rests fundamentally on when that proponent-entity will achieve financial closing.

“It’s really a ‘first come, first served’ basis. So the financial compliance or the financial closing is really much needed in this project,” Energy Undersecretary Donato D. Marcos has stipulated in previous Congressional hearings.

In the end, he noted the “permit to construct” for the country’s LNG terminal, primarily for Luzon grid, will just be given to one investing-party.

That is despite the fact that there are 18 investor-groups currently in the roll of the DOE that are eyeing to set up the country’s LNG import facility – either as an onshore terminal or the FSRU configuration.

On presumption that many of the interested investors are actually all financially and technically capable to do the project – the likes of First Gen Corporation, Tokyo Gas Co. Ltd., CNOOC and Lloyds Energy Group, the energy department insisted that achieving a financial closing shall still be deemed as major indication of seriousness to really pursue the LNG terminal venture.

“The first one who gets the financial closing and all the compliance will definitely get the project,” Marcos has reiterated.

The energy official similarly qualified that the 5.0 million mtpa will be for the Luzon market; while Visayas proponents will have to submit and apprise the DOE of calculations on what shall be the tangible gas needs of that particular grid.

Of the propounded capacity of the LNG terminal, the department indicated that 3.4 million mtpa will be enough to feed the existing gas-fired plants of the country; while 1.6 million mtpa shall be allotted for capacity expansion.