First Gen dangles ‘reverse proposal’ on LNG project

Published January 31, 2018, 10:00 PM By Myrna M. Velasco

https://business.mb.com.ph/2018/01/31/first-gen-dangles-reverse-proposal-on-lng-project/

The “unsolicited proposal” tendered by First Gen Corporation to state-run Philippine National Oil Company (PNOC) takes a “reverse track,” because instead of the Lopez firm joining the government-underpinned liquefied natural gas (LNG) project, it has instead invited the latter to be its partner on its blueprinted LNG import facility.

That was divulged by the chair of the Technical Working Group (TWG) of PNOC, basing it on correspondence that they have had with the Lopez firm.

The PNOC official qualified though that “we still consider their offer as part of the unsolicited proposals we received for our LNG project … but it is just a different mode from what we have had intended for our planned facility.”

The source added that “the offer of First Gen has not been opened yet,” as the state-run company is still evaluating the third “unsolicited proposal submission” – and that is from Lloyds Energy Group.

The energy executive emphasized that two offers were “returned,” but one of them came up with a revised ‘unsolicited offer’ and submitted it just several hours from the time its original tender had been given back.

“The process of our evaluation depends on ‘first on time’ submission,” the source added, noting that the first investor-groups that lodged their offers will also be priority on the evaluation and review queue.

Meanwhile, on First Gen’s LNG import facility project, this has been on its blueprint 3-4 years ago already, but it got stalled for some time on its selection of strategic partners.

Company executives previously indicated that they have been in talks with prospective Asian and European partners, but until now, there had been no “tie up deal” cemented so far.

The Lopez firm crunched tentative investment cost of US$1.0 billion for the LNG regasification and import terminal, at a capacity of 5.0 million tons per annum.

On that scale, company executives reckoned that the facility would be able to support the fuel needs of the existing plants in the country, plus the anticipated “new builds” in the sector.

Post the productive years of the Malampaya gas field, it is anticipated that gas-fired electricity generation will now be left generally into the hands of the Lopezes as the Ilijan plant is now mulled for conversion into a diesel-fired power facility.