FGen, SMC talks roll on $1-B LNG project

Published September 24, 2018, 10:00 PM By Myrna M. Velasco

https://business.mb.com.ph/2018/09/24/fgen-smc-talks-roll-on-1-b-lng-project/

High-level exploratory talks have already rolled between Lopez group’s First Gen Corporation and San Miguel Energy Corporation for the planned $1.0-billion onshore liquefied natural gas (LNG) import facility to rise in Batangas province, and is targeted for 5.0 million tons per annum capacity. 

irst Gen Chairman and Chief Executive Officer Federico R. Lopez divulged that he himself already had discussions with San Miguel Corporation (SMC) President and COO Ramon S. Ang.

“We’ve had discussions with Ramon… a lot of it is not sit-down, put on paper type; but just registering their interest and all that,” Lopez told reporters.

He added the pitch on their preliminary talks would be to let San Miguel know that “if they want to be part of it (LNG terminal project), that’s welcome. That’s very, very welcome…he (Ang) knows he’s welcome.”

Lopez emphasized that major consideration in their project blueprint is scale, hence, they are factoring in the 1,200-megawatt Ilijan gas-fired power project as part of the entire business development synergy – whether the two companies will eventually end up as partners in the venture; or the San Miguel plant will be an offtaker of gas from the import facility.

“Definitely, scale is so important – the scale of the off-take (gas volume purchase), so Ilijan and San Miguel are a key component to that,” the First Gen top executive stressed.
Lopez further explained, “Scale is one thing – and you look also at the ramp up – the number of megawatts that you’re going to support at different points in time. How much can the market absorb?”

He emphasized “the one thing about LNG terminal is that it is very, very sensitive to off-take volume. If the off-take volume is large, then the throughput price of the LNG terminal will be lower; and also, it will be lower power cost, so you’d be able to compete – so that’s very important.”

The First Gen chairman qualified though that there are still “too many moving parts right now,” even for that formal talk with San Miguel to really advance.

“It’s all floating – but then it’s good to be aware who’s interested and for what… then you can start bringing this together as the pieces would be falling into place,” Lopez reckoned.

First Gen, he said, is still sorting out concerns relative to gas pricing issues, tapping partner/s to the project and even on discussions with government on project plans – both with the Department of Energy (DOE); and state-run Philippine National Oil Company (PNOC) which is also pursuing its own LNG import facility of 3.0 million tons per annum capacity and will be leaning initially on floating storage regasification unit (FSRU) technology.

“We’re always open to talking and discussing because this is not only a decision that we should be making – but we should be making as a country because these are major indications for the future,” Lopez asserted.

Engaging a strategic partner is one specific agenda that the company looks forward to cementing next year; while also re-examining gas pricing that shall be indexed to coal.

“That kind of flexibility (coal indexing for gas price) is available today – a number of suppliers are willing to do it. You just have to do it and you’d be nailing all of those things,” he conveyed.