Government urged to spur investments in LNG sector

MANILA, Philippines - The government should take the lead in enticing investments in the liquefied natural gas (LNG) industry to stir demand for the resource, an industry player said.

A number of power companies have expressed interest in investing in LNG but the cost of putting up a facility and demand have kept these plans on the drawing board, AboitizPower chief executive officer Erramon Aboitiz said.

These include First Gen Corp. of the Lopez Group, Manila Electric Co., and Pilipinas Shell Petroleum Corp.

“I believe all of us face the same problem, which is the cost of building a terminal of a certain size,” Aboitiz said.

“It’s massive. It’s something very difficult for one party to do that alone, maybe that’s something government should do, come in and facilitate this terminal so that power producers can just buy the LNG,” Aboitiz added.

The same concern was earlier raised by AC Energy Holdings Inc., the power generating arm of conglomerate Ayala Corp.

 AC Energy president and CEO John Eric Francia earlier said the firm is considering to add LNG in its energy portfolio only when it is financially feasible.

He said scale, value and supply chain is needed first to make LNG projects viable.

Through the Department of Energy (DOE), the Philippine government has been crafting an LNG master plan to assess the viability and identify opportunities.

State-owned Philippine National Oil Co. (PNOC) has planned the P10.52-billion Batangas-Manila natural gas pipeline (BatMan 1) to spur investments in LNG. The project has long been facing delays.

The only energy-related project under the Aquino administration’s flagship public-private partnership (PPP) program, the BatMan is a 121-kilometer transmission pipeline that would transport and supply natural gas from Batangas to Metro Manila.

It was supposed to be cleared by the National Economic and Development Authority Board led by President Aquino last September after securing the go-ahead of the NEDA-Investment Coordination Committee.

The PPP Center said last December government hopes to roll out eight projects, including Bat-Man 1, before the end of the Aquino administration.

Once government facilitates LNG investments, consumption of LNG would go up even without mandating a certain percentage of LNG in the country’s energy mix, Aboitiz said.

“LNG makes sense, from an economic point of view even if the cost of fuel is more expensive, for peaking, mid merit operations. So you will see that people will start building power plants to be able to supply that portion of the demand,” he said.