DOE open to PNOC-First Gen partnership on LNG facility

by Myrna Velasco May 18, 2016 (updated)

http://www.mb.com.ph/doe-open-to-pnoc-first-gen-partnership-on-lng-facility/

The Department of Energy (DOE) is agreeable to joint venture discussions that will set state-run Philippine National Oil Company (PNOC) cornering a stake in the planned liquefied natural gas (LNG) facility to be put up by First Gen Corporation of the Lopez group.

Energy Secretary Zenaida Y. Monsada indicated to media that the parties “are now talking” although there had been no “definitive deal” arrived at yet.

She noted that they would highly prefer a private sector-led venture on LNG terminal, although it will not necessarily hurt if the government through PNOC will corner equity in the project.

Monsada said PNOC will partner with First Gen “if it will help hasten investment flow” for the planned LNG regasification facility.

The Lopez group has penciled in $1.0 billion worth of capital outlay for its proposed LNG import handling plant, which will then be part of its longer-term gas investment aspiration for the country.

First Gen’s interest in putting up the LNG terminal is seen as a prudent venture because the company also stands as the country’s biggest end-user of gas – primarily for power applications.

Beyond power, the intent of the government will be to expand the utilization of gas to other segments – fundamentally industrial end-users and the transport sector.

PNOC’s foray into gas infrastructure development is also seen critical because it has been vested with the mandate to install the high-pressure gas pipeline to underpin a greenfield gas-fired power project in Manila.

The bigger investment preparation that both the government and private sector players have been preparing for would be the lapse of the gas sale and purchase agreements (GSPAs) and the substantial decline in Malampaya gas production by year 2024.

Based on First Gen’s project blueprint, it wants the LNG facility advancing to commercial operation prior to that period – or at least around year 2021-2022.

Following completion of the project’s front-end engineering design, the company is working next on tapping partners and eventual award of their turnkey contract.