First Gen picks Japan’s JGC for LNG project in Batangas

By Lenie Lectura – September 3, 2019
from Business Mirror

FIRST GEN Corp. (FGEN) has chosen JGC Corp. of Japan as the engineering, procurement and construction (EPC) contractor for its billion-dollar liquefied natural gas (LNG) project in Batangas.

This marks the conclusion of an extensive EPC tendering phase which commenced in 2014, during which around 22 companies were invited and 18 of them expressed an interest to participate in the tender process and work on FGEN Batangas LNG Terminal Project.

The project is being developed by First Gen through its wholly-owned subsidiary, FGEN LNG Corp. (FGEN LNG).

Jonathan Russell, executive vice president and chief commercial officer of First Gen, said the project is crucial to ensure the continued operations of the 3.2-gigawatt (GW) existing natural gas-fired plants given the expected and continuing reduction in gas supply from the Malampaya field up to the expiration of the contracts by 2024.

“We look forward to working with JGC to make this Energy Project of National Significance a success,” he said.

JGC’s initial work is to complete a detailed study focusing on modifications that can be made to FGEN’s existing jetty that would allow FGEN to receive large- and small-scale LNG vessels and to continue to receive liquid fuel.

Following completion of this study, FGEN’s existing jetty could be modified to enable LNG to be brought in via a floating storage regasification unit (FSRU) on an interim basis during the term of President Duterte.

An FSRU is an LNG storage ship that has an onboard regasification plant capable of returning LNG back into a gaseous state. This can then be supplied directly to some or all of FGEN’s existing power plants, should Malampaya be unavailable for any reason.

First Gen already operates four gas-fed power plants with an aggregate capacity of about 2,000 MW. These are the 1,000-MW Santa Rita, 500-MW San Lorenzo, 414-MW San Gabriel and 97-MW Avion.

Easing pressure on Malampaya

Russell said this would allow FGEN to receive LNG as early as 2021, even prior to the expiration of the Malampaya gas contracts in 2024.

“This would reduce the strain on Malampaya as its reliability continues to decline up to 2024, increasing the energy security of the Philippines and reducing the number of times that FGEN will be requested to run on liquid fuel when Malampaya gas is unavailable,” he said.

Moreover, the FGen official pointed out that the LNG project will encourage new power plant developments, as well as industrial and transport industries to consider it as a replacement to more costly and polluting fuels.

“The early introduction of LNG by FGEN would also enable LNG to immediately become a fuel choice for any developer that is considering the building of new gas-fired power plants with a lower carbon footprint that will support introduction of more intermittent renewables for the Philippines as an alternative to building new coal-fired power plants and also offer a potential means for the Ilijan Project to receive gas after its contract with Malampaya ends in 2022,” added Russell.

The company said that the project is consistent with both the Department of Energy’s (DOE) Nine Point Energy Agenda and PEP 2017-2040 as it promotes LNG importation as an option to supplement and replace Malampaya gas.

In August, the project was declared an “Energy Project of National Significance” (EPNS) in accordance with Executive Order No. 30 on the ground that the project will require the development of significant infrastructure and capital investment involving complex technical processes and engineering designs resulting in a substantial positive impact on the environment. In May, FGEN LNG held a “Kagami Biraki” groundbreaking ceremony at the First Gen Clean Energy Complex.