Four local, foreign firms submit proposals for govt LNG project

By Lenie Lectura – March 4, 2018
from Business Mirror

THE Department of Energy (DoE) has received four proposals from local and foreign firms that are interested to put up an integrated liquefied natural gas (LNG) facility in the country, following the issuance of the downstream natural gas industry policy.

DOE Assistant Secretary Leonido Pulido said Tokyo Gas, China National Offshore Oil Co., First Gen Corp. and Cleanway Technology Corp. have recently submitted letters of interest.

“They are interested to put up an integrated LNG facility that includes storage, regasification [a process of converting LNG at-162 ° Celsius temperature back to natural gas at atmospheric temperature] and distribution,” Pulido said. “They submitted letters of interests and request for preliminary conference. After that, it’s when you are supposed to submit a formal application.”

The four firms’ interest were stoked after the DOE issued Department Circular 2017-11-0012, or the “Rules and Regulations Governing the Philippine Downstream Natural Gas Industry.”

Stakeholders have waited for the issuance of a gas policy to guide them in pursuing this capital-intensive project.

“Essentially, it allows rules that would determine who among several stakeholders can have the authority to put up the LNG integrated facility. Under this, our government corporations will just be one of several competitors to make it more efficient and make the system more orderly,” Pulido said.

The letters of interests were submitted to the DOE. Pulido said these proposals are separate from what the companies have also submitted to the Philippine National Oil Co. (PNOC), which intends to put up a $2-billion LNG terminal.

Earlier, the PNOC said it received offers from First Gen Corp., Energy World Corp., PT Jaya Samudra Karunia, PT PGN LNG Indonesia/PT Bosowa Corporindo with local partner MOF Corp., Korea Electric Power Corp., Lloyds Energy Group and CNOOC. It was not clear how the DOE would go about with the proposals it has received when another state firm has also received offers for the same project.

“Yes, this is different. Nothing is written in stone,” Pulido said. “Whoever can suggest the best petition that can address our need in ensuring continued supply.”

But under the policy, PNOC or its unit PNOC Exploration Corp. (PNOC-EC) may acquire at least a 10-percent stake in the LNG project.

“We have complied with all the policy regulations, it’s up to them [PNOC] to find a partner,” Energy Secretary Alfonso G. Cusi said during the signing of the LNG policy, adding that PNOC is still choosing a partner.

Pulido said that, based on the rules, the LNG terminal’s power plant component can be 100-percent owned by foreigners, although the public utility component is subject to the constitutional limitation of 40-percent foreign ownership.

Under the rules, excess capacity of the LNG terminal, transmission system, distribution system and other services offered by the operator should be made available on a transparent and nondiscriminatory basis to third-party users.

Pulido said the DOE natural gas evaluation committee will decide which proposal.

“The policy does not allow the DOE to say that there’s only one investor that should be designated in one area,” he explained. “But we are studying whether if we should do that.”

The LNG project should be completed before the expected depletion of the Malampaya offshore-gas find near Palawan island in 2024.

LNG is natural gas that has been converted into a liquid state for easier storage and transportation. Upon reaching its destination, LNG is regasified so it can be distributed through pipelines as natural gas.

Cusi said the government is aiming to turn the Philippines into a hub for LNG, amid a depletion of natural gas from the Malampaya gas field in Palawan in less than a decade. Currently, around 3,500 megawatts of power plant capacity is dependent on the country’s sole natural gas source.

The DOE has scheduled the groundbreaking for the country’s first LNG hub in 2018, with project completion still being eyed within the six-year term of President Duterte.