First Gen open to partner with SMC for LNG project

MANILA, Philippines — First Gen Corp. of the Lopez Group is willing to partner with San Miguel Corp. (SMC) for the development of a liquefied natural gas (LNG) terminal costing at least $1 billion and slated for construction in 2019.

In an interview after the annual stockholders meeting of First Philippine Holdings Corp. yesterday, First Gen chairman and CEO Federico Lopez said they are “very open” to partner with SMC, one of the country’s biggest gas users through the 1,200-megawatt (MW) Ilijan power plant in Pangasinan.

“Their participation in the LNG import scheme will be very, very welcome. In fact, the LNG terminal is subject to economies of scale, so the more that use it, the cheaper it becomes for everybody and the easier it is to bring power costs down,” he said.

First Gen president and COO Giles Puno said talks with SMC should happen within the year if the partnership would push through.

“As I discussed previously, it’s a big investment, it’s about $1-1.2 billion. Because it is such, our view is as long as we have a significant stake and that could be as low as 50 percent, 40 percent, we have to balance what we have to give to other strategic investors,” he said.

“What’s important is everybody has to be in the game, they have to have an investment so that it is in their interest for the investment to succeed. We talk about possibly, the key buyers of the gas, they are incentivized to make sure that the success of investment is there,” he said.

Earlier, First Gen set a goal to finalize partnerships and the engineering, procurement and construction (EPC) contractor for its planned LNG terminal within the year to be able to start development next year.

Meanwhile, SMC president and COO Ramon Ang said the company is considering investments in the LNG sector to meet the future fuel requirements and expand the capacity of the Ilijan power plant.

Ang said SMC is planning to keep the Ilijan plant as a gas-fired generating facility and raise its capacity to 3,000 MW after the independent power producer agreement (IPPA) contract expires in 2022.

He said the group is also open to talks with First Gen to build the LNG terminal.

First Gen’s planned LNG terminal will have the capacity to supply a minimum five million tons of natural gas equivalent to 5,000 MW, located within the Lopez Group’s clean energy complex which houses the 1,000-MW Sta. Rita, 500-MW San Lorenzo, San Gabriel and 97-MW Avion gas plants.

The Lopez Group’s proposed LNG terminal presents a real option for the country because it is currently  the most advanced, company officials said.

The proposal was presented to the government through the Department of Energy (DOE) as a viable option to jumpstart the country’s LNG industry.

It also submitted its intention to participate in the DOE’s Philippine Downstream Natural Gas Regulation (PDNGR) issued in December 2017.

First Gen had previously disclosed that it submitted an unsolicited proposal to state-run Philippine National Oil Co. (PNOC) to participate in its onshore storage and regasification terminal to be constructed within the First Gen clean energy complex.