First Gen in talks with LNG suppliers

MANILA, Philippines — Lopez-led First Gen Corp. has commenced talks with potential suppliers and an offtaker as it eyes to start supplying liquefied natural gas (LNG) from its floating storage and regassification unit (FSRU) by 2021.

During Powertrends 2019, First Gen executive vice president and chief operating officer Jonathan Russell said the company is in active discussions with major LNG suppliers.

“We’re not ruling anybody out. We’re talking to all of the main LNG supply companies, portfolio players, national oil companies and even traders,” he said.

“We’re just trying to find which of those entities can provide  supply which is most fitting with the Philippines’ needs as a new buyer, especially maximizing flexibility,” Russell said.

First Gen is looking at securing two supply contracts—one for long-term and another for the short-term.

“[There are] two different time horizons. The first is long term, from 2024 onwards. Then separately, we need to look at the gas supplier in the interim, so 2021 to 2023. It may be different suppliers because the needs are different,” Russell said.

With the FSRU, the company will be able to start importing gas supply within the Duterte administration, way ahead of the expiration of the Malampaya service contract in 2024. An on-shore LNG terminal will then be built for the long term.

It is currently working on a feasibility study to modify the jetty in its First Gen Clean Energy Complex (FGCEC) in Batangas to be able to accommodate an FSRU, which would have a capacity of around 170,000 cubic meters.

“We have to make sure that the technical solution is robust. Assuming it’s robust, we can start the construction very quickly because we already have the existing jetty. We don’t need to build a new one, we just need to modify it,” Russell said.

Meanwhile, First Gen has also started talks for the possible gas supply for the 1,200-megawatt (MW) Ilijan power plant, whose gas sales and purchase agreement (GSPA) with the Malampaya project will expire by 2022.

“We have spoken with the entities involved in Ilijan and I think there’s an open mind because Ilijan will need a gas supply. Of course, they have their own options. We wouldn’t presume anything, they’re free to make their own choices,” Russell said.

“But once we bring in LNG to the Philippines, it is obviously an option for them and the nice thing is it is already connected via the existing pipeline so the supply would be easy to arrange,” he said.

First Gen recently selected JGC Corp. of Japan after an extensive engineering, procurement and construction (EPC) tendering phase which commenced in 2014 for its FGEN Batangas LNG Terminal Project.

JGC has constructed LNG plants that account for approximately 30 percent of the global LNG production.