Local, foreign firms eye integrated facility for liquefied natural gas

By on March 13, 2018

Four local and foreign companies expressed interest to develop an integrated liquefied natural gas (LNG) facility in the Philippines, following the issuance of the downstream natural gas industry policy, said the Department of Energy (DOE).

Energy Assistant Secretary Leonido Pulido said Tokyo Gas, China National Offshore Oil Company (CNOOC), First Gen Corporation, and Cleanway recently submitted letters of interest on the proposed integrated LNG facility.

This came after the DOE issued Department Circular 2017-11-0012, detailing the rules and regulations for the Philippine downstream natural gas industry.

“They are interested to put up an integrated LNG facility that includes storage, regasification, and distribution,” said Pulido.

“They submitted letters of interest and request for [a] preliminary conference. After that, it’s when you are supposed to submit a formal application,” he added.

Oil and energy companies have waited for the issuance of the department circular to guide them in pursuing the costly project. (READ: Meralco to bid alone for AES’ coal plant in Zambales)

“Essentially, it allows rules that would determine who among several stakeholders can have the authority to put up the LNG integrated facility,” said Pulido.

“Under this, our government corporations will just be one of several competitors to make it more efficient and make the system more orderly,” he added.

The energy official said the letters of interest are separate from what the companies have submitted to the Philippine National Oil Company (PNOC), which plans to put up a $2-billion LNG terminal.

‘Best petition’

Earlier, the PNOC said it received offers from First Gen, Energy World Corporation, PT Jaya Samudra Karunia, PT PGN LNG Indonesia/PT Bosowa Corporindo with local partner MOF Corporation, Korea Electric Power Corporation, Lloyds Energy Group, and CNOOC.

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

Under the circular, the PNOC or its unit PNOC Exploration Corporation may acquire at least a 10% 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 Cusi said during the signing of the LNG policy, adding that the PNOC is still choosing a partner.

Pulido said that based on the rules, the LNG terminal’s power plant component can be 100% owned by foreigners, although the public utility component is subject to the constitutional limitation of 40% 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 non-discriminatory basis to 3rd-party users.

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

LNG is natural gas that has been converted into a liquid state for easier storage and transportation.

Cusi said the government wants to turn the Philippines into a hub for LNG, given the expected depletion of natural gas from Malampaya in less than a decade.

Around 3,500 megawatts of power plant capacity is dependent on the country’s sole natural gas source – Malampaya.

The energy department has scheduled the groundbreaking for the country’s 1st LNG hub in 2018, with project completion still being eyed within the 6-year term of President Rodrigo Duterte.

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