First Gen selects Japan firm to build $1-B LNG terminal

MANILA, Philippines — Lopez-led First Gen Corp. has tapped JGC Corp. of Japan as engineering, procurement and construction (EPC) contractor to build its $1-billion liquefied natural gas (LNG) terminal in Batangas.

This will initially include the construction of a floating storage and regassification unit (FSRU) to be able to start importing gas supply.

In a disclosure to the Philippine Stock Exchange, First Gen said it had selected JGC after an  extensive EPC tendering phase which commenced in 2014 for its FGEN Batangas LNG terminal project.

During the tendering phase, around 22 companies were invited and 18 expressed an interest to participate in the tender process and work on the project. 

JGC has been responsible for constructing LNG plants that account for approximately 30 percent of global LNG production.

“We look forward to working with JGC to make this energy project of national significance (EPNS) a success, as the project is crucial to ensure the continued operations of the 3.2 gigawatts (GW) existing natural gas-fired plants given the expected and continuing reduction in gas supply from the Malampaya field up to the expiration of the contracts by 2024,” First Gen executive vice president and chief operating officer Jonathan Russell said.

To meet the government’s request to start importing LNG supply within the Duterte administration, First Gen said it would start the LNG project with an FSRU to bring in LNG supply as early as 2021 – way ahead of the expiration of the Malampaya gas contracts in 2024.

An FSRU is an LNG storage ship that has an onboard regasification plant capable of returning LNG back into a gaseous state. This can then be supplied directly to some or all of First Gen’s existing power plants, should Malampaya be unavailable for any reason. 

The company is currently working on completing a detailed study focusing on modifications that can be made to its existing jetty to receive large and small-scale LNG vessels and to continue to receive liquid fuel.

Once the study is completed, First Gen said it would start construction of the modified jetty as soon as possible with JGC as its EPC contractor.

The firm said it believes the project and the early entry of LNG would play a critical role in ensuring the energy security of the Luzon grid and the Philippines.

Moreover, the entry of LNG will encourage new power plant developments, as well as industrial and transport industries to consider it as a replacement to more costly and polluting fuels. 

“In the short term, we look forward to working with JGC to explore the exciting possibility of modifying First Gen’s existing jetty that would enable LNG to be brought in via an FSRU on an interim basis during the term of President Duterte,” Russell said.

“This would reduce the strain on Malampaya as its reliability continues to decline up to 2024, increasing the energy security of the Philippines and reducing the number of times that FGEN will be requested to run on liquid fuel when Malampaya gas is unavailable,” he said.

According to First Gen, its project is consistent with both the Department of Energy’s (DOE) Nine Point Energy Agenda and Philippine Energy Plan (PEP) 2017-2040 as it promotes LNG importation as an option to supplement and replace Malampaya gas, ensuring a sustainable supply to develop LNG for the future in anticipation of the depletion of the Malampaya resource.