Lucio Tan group prods DOE on go-ahead for LNG project

By Lenie Lectura -December 23, 2019
from Business Mirror

THE group of Lucio Tan is seeking the go-ahead of the Department of Energy (DOE) for its planned LNG (liquefied natural gas) project.

“They applied for NTP [notice to proceed] already,” said Energy Undersecretary Donato Marcos, adding that the application has already reached his office. “There is a process. We are working on it already.”

Marcos is also the chairman of the agency’s Centralized Review and Evaluation Committee.

Batangas Clean Energy is the project proponent that will pursue the onshore LNG terminal that will be located in Pinamucan Ibaba in Batangas City, said the DOE official. “It’s a consortium also. I am not familiar with the members of the consortium.”

In June, Gerardo Tee, the overall head of LTGC Distillery Operations and Absolut Distillers Inc. chief operating officer, said the group is considering to utilize its 38-hectare property in Pinamucan, Batangas, as a possible site for the planned LNG.

Tee had said the LNG project, which may cost $1.5 billion, will include regasification facilities, LNG terminal and power plants, possibly with a power generating capacity of 1,000 megawatts (MW).

If the group is issued an NTP, it will be the fourth LNG player in the country. The other firms awarded with NTPs are Tanglawan Philippine LNG Inc., FGEN LNG Corp. (FGEN LNG) and US-based firm Excelerate Energy LP.

Since tycoon Lucio Tan holds interests in the airline, banking, liquor, tobacco, real-estate industries and education, Marcos said the LNG project would be viable because of its prospective off-takers.

“[Their] business model, or captive market, to assure viability, includes Tanduay, Asia Brewery, Eton, JG Summit and others,” said the DOE official.

In August, Sen. Sherwin Gatchalian said the late Lucio “Bong” Tan Jr. personally conveyed to him the intention of the group to join the LNG bandwagon.

Gatchalian said then that Tan’s MacroAsia Corp., a leader in aviation support services, is partnering with Gen X Energy, a company backed by Blackstone Energy Partners.

“MacroAsia and a foreign firm. Bong Tan talked to me personally. We went to their tobacco plant. He said they will pursue a plan to put up an LNG terminal and regasification terminal,” said the senator.

The lawmaker also said many interested firms, mostly foreign, want to participate in the country’s LNG sector. “The interest is huge.”

The senator is working on a comprehensive LNG bill to serve as the ultimate framework of the LNG and LPG (liquefied petroleum gas) industries. “We will file a resolution for a LNG and LPG bill. It’s about the industry, and Malampaya and updates on where LNG is at this point. We are working with DOE on this,” said Gatchalian.

The DOE actively promotes LNG as an option to supplement and replace gas from the Malampaya gas field, which is expected to be depleted starting 2024.

Interested LNG investors have been saying that a capital-intensive project, such as LNG, would require a clear direction from the government since investment in LNG is estimated to cost at least $1 billion.

Gatchalian said the LNG law must also require the presence of off-takers to ensure the sustained viability of the gas resource.