DOE permits FGen to build LNG hub

By Lenie Lectura – March 8, 2019
from Business Mirror

THE Department of Energy (DOE) on Thursday issued to FGen LNG Corp. a notice to proceed (NTP)  with its plan to construct the FGen Batangas LNG (liquefied natural gas) terminal.

“I am happy to say we have signed the NTP this morning,” Energy Secretary Alfonso G. Cusi told reporters.

First Gen’s onshore storage and regasification terminal will have a capacity to supply a minimum 5 million tons of natural gas equivalent to 5,000 megawatts (MW) and is expected to cost over $1 billion.

The proposed FGen Batangas LNG terminal project is intended to serve the natural gas requirements of existing and future gas-fired power plants of third parties and FGen LNG affiliates.

First Gen operates the following gas plants: 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.

FGen LNG signed a joint development agreement with Tokyo Gas Co. Ltd., Japan’s largest natural gas utility. The JDA is a preliminary agreement between the parties to jointly pursue development of the LNG terminal project in Batangas.

Under the deal, Tokyo Gas will take a 20-percent participating interest in the FGen LNG project and provide support in development work to achieve a final investment decision (FID).

Once an FID is reached, the parties will enter into a definitive agreement to proceed with the construction of the FGen Batangas LNG terminal project.

This is the second NTP for LNG project issued by the DOE. The first NTP was awarded to Tanglawan Philippine LNG Inc., the joint venture of Phoenix Petroleum Philippines and China’s CNOOC Gas and Power.

“There is no overlapping because otherwise, we will not have approved it. It was approved because of their business model. They can stand and live up to their business model,” said Cusi when asked if the two LNG projects will be viable given both of their proposed project location is in Batangas.

First Gen President Francis Giles Puno said on Wednesday night that a possible award of NTP to the Lopez-led firm “would have been a positive development.”

“The next phase is the selection of the contractor. The main reason for selecting the contractor is to firm up the cost of the project. Hopefully, we move toward financing close. We can firm up all of that partnership arrangement within the year so that hopefully, we can proceed by next year. What we want is to make the decision this year and then proceed. So far, it is Tokyo Gas,” Puno said.

First Gen, he said, is also looking at other partners to take in.

“Since our announcement in Tokyo Gas, there has been increased interest of other foreign investors. For me, it improves our likelihood to be able to proceed with the project,” Puno said.