Tanglawan first to submit application to develop LNG hub in PH

By on October 25, 2018

TANGLAWAN Philippines LNG Inc., the partnership between state-owned China National Offshore Oil Corp. (CNOOC) and Philippine fuel retailer Phoenix Petroleum, is the first to submit an application with the Department of Energy (DOE) to develop an LNG (liquefied natural gas) hub in the country.

“CNOOC and Phoenix submitted both technical and financial application. But we wrote them a letter last week informing them about certain observations about their application,” DOE Assistant Secretary Leonido Pulido said.

Pulido said both firms plan to put up a corporation. However, they have yet to register Tanglawan with the Securities and Exchange Commission (SEC), BusinessMirror reported.

“They have not yet been issued a certificate of registration by the SEC. They were supposed to file this week before we start our evaluation,” Pulido said.

Once CNOOC and Phoenix have complied, the DOE will commence evaluating the application.

“It will take 30 days to evaluate upon submission of complete documents,” he said.

Last June, CNOOC and Phoenix sign a memorandum of understanding to study, plan and develop an LNG receiving terminal project in the Philippines.

Since the DOE issued last year a circular on the Philippines Downstream Natural Gas Regulation (PDNGR), which spells out the rules governing the downstream natural gas industry, 18 foreign and local firms have so far expressed interest to pursue LNG projects. Except for CNOOC and Phoenix, none of them have so far submitted a formal proposal to the DOE.

The other firms are Cleanway Energy Development, First Gen Corp., Tokyo Gas Co. Ltd., CGN New Energy Holdings Co. Ltd., Philippine National Oil Co., VIRES Energy Corp., DeEnergy International Corp., SK E&S Co. Ltd., Carmine Energy Pte. Ltd., Transformation Llc., Limay LNG Power Corp., Kepco E&C, Atlantic Gulf & Pacific Co., Osaka Gas Co. Ltd., Lloyds Energy, PhiLNG Ltd. and BKB Consortium.

Last month lawmakers and the DOE started working together to craft a law on LNG that will include, among others, an improved energy mix meant to entice private-sector investment. “We are now on the process of working with the DOE in coming up with a comprehensive LNG law that will become the ultimate framework of the LNG industry,” said Sen. Sherwin T. Gatchalian, chairman of the Senate Energy Committee.

He said a law is needed to “make sure the future of LNG will be viable and sustainable” because a department circular issued by the DOE may not be enough.

“The DOE is agreeable to the creation of a law because we don’t have a law now that governs LNG. It’s just a circular now. We will have a framework to regulate the importation of LNG, the terminal activities of LNG, and also the liquefaction of LNG,” Gatchalian said.

Interested LNG investors say that a capital-intensive project, such as an LNG hub, would require a clear direction from the government since investment on LNG is estimated to cost at least $1 billion. This prompted the DOE to suggest it can take the lead in the development of the LNG hub in the country in the event that none of the interested private firms pursue their interest in LNG.

“They all expressed interest, but at the end of the day, we can’t force them to invest. We have no choice then, but to find a way to do it,” Pulido said.

“I think we’re going to need a law where the government can come in and be proactive. We have no guarantees that the private sector would be willing to make a risk for us,” he said.

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