Three Cornered Contest for Philippines LNG Import Facility
It will be a three-cornered contest for the installation of the Philippine LNG import terminal that could commercially cater to other end-users, aside from the incumbent power plant off-takers.
The Department of Energy (DOE) announced that its review and evaluation committee is processing the applications of Tanglawan Philippines LNG (the joint venture of Cnooc and Davao businessman Dennis Uy); First Gen Corporation in partnership with Tokyo Gas; and US company Excelerate Energy.
Of the three, according to energy undersecretary Felix William B. Fuentebella, the one with highest probability to be awarded soon with notice-to-proceed (NTP) on its LNG projects is Tanglawan Philippines LNG, which has been casting US$1bn capital outlay for onshore LNG import terminal of 5 million metric tons/year capacity and another US$1bn for planned 800 to 1,000-MW gas-fired power plant. These facilities will be sited in Batangas province, south of Metro Manila and close to where the existing gas-fed power plants are.
“Tanglawan’s application is now at the final stages of approval by the DOE’s review and evaluation committee,” the energy official said. As explained, the NTP is the ultimate government permit that LNG project proponents shall be securing before they can kick off implementation of their proposed ventures.
Latter part of December 2018, First Gen also lodged its application for NTP for its planned 5mn mt/yr onshore LNG import facility proximate to its four gas-fired power plants in Batangas (the 1,000-MW Sta Rita, 500-MW San Lorenzo, 414-MW San Gabriel and 97-MW Avion generating assets). The company also penciled in investment of US$1bn for the 5mn mt/yr import terminal.
The latest one to join the LNG investment contest is Texas-based Excelerate Energy which is proposing a floating storage regasification unit (FSRU). Its application is also under process by the DOE, according to agency officials.
The LNG terminal project of Energy World Corporation (EWC) was first given the go-signal to advance to implementation phase, but the DOE qualified that is intended for 'own use' of its 650-MW gas-fired power plant.
An ‘own use’ LNG facility can just cater to a dedicated power plant asset; while a commercial LNG import terminal is allowed to sell to other off-takers (gas purchasers) such as power plants other than those owned or operated by the proponent and can also supply to industries and other end-users.
DOE undersecretary Donato D. Marcos, who is the chairman of the committee reviewing the LNG investment applications, qualified that their evaluation focuses on the technical competence and the financial capacity of the proponents.
“The financial compliance or the ability of the project proponent to achieve financial closing is paramount in our evaluation because that gives certainty that the LNG terminal will really be concretised for the country, we need to assure that,” he stressed.
Beyond that, the DOE also requires project proponents to submit information on project siting as well as their targeted engineering, procurement and construction (EPC) contractors and the gas supplier.
Marcos indicated that the department may issue not just one, but two licenses or NTP for the LNG import terminal projects. So far, the DOE is consistent that one most discernible awardee is Tanglawan of the Cnooc-Uy tandem.
Of the proposed capacity of the LNG terminal, the department indicated that 3.4mn mt/yr will be enough to feed the existing gas-fired plants of the country; while 1.6mn mt/yr shall be allotted for capacity expansion.