Philippines seen as attractive market for global LNG suppliers — Fitch

MANILA, Philippines — The Philippines is seen as an attractive market for global liquefied natural gas (LNG) suppliers in the next few years as it looks for alternatives to the depleting Malampaya deepwater gas-to-power project.

In its latest commentary, Fitch Solutions Macro Research said that from a price standpoint, the next few years are likely to prove an opportune time for the Philippines to commence LNG imports.

“Global spot LNG prices are forecast to remain anchored at lower levels over the next few years,” it said.

This as the US, Middle East, East Africa and Russia accelerate supply growth and add more liquefaction capacity across the globe, which outpace the otherwise strong growth forecast for gas demand across emerging markets.

Fitch Solutions noted that the Philippines has yet to enter into any LNG supply contracts for its terminals, which could prove to be an attractive market for the growing legion of LNG suppliers globally.

“To date, several options have been mulled, mostly involving shorter-term procurements from portfolio players or from existing overseas assets held by project developers,” it said.

While Fitch Solutions said the Philippines’ need to find alternative sources of gas remains dire, the Philippine government sees LNG imports as a substitute to declining Malampaya gas production and to meet rising demand.

“A number of LNG regasification projects have been put forth by a consortium of domestic and foreign firms, as the race to fill the Philippines’ imminent gas deficit heats up,” Fitch Solutions said.

Energy World Corp. (EWC)’s Pagbilao LNG project—which has long been delayed due to funding concerns, regulatory hold ups and delays to gaining approval to connect to the national grid—is targeted to bring the project online some time this year.

The Pagbilao LNG project is projected to enable imports of up to three metric tons per annum (mtpa) of LNG imports, mainly to supply gas-fired power generation units of 650 megawatts (MW) within the complex.

First Gen’s project with Tokyo Gas in Batangas will have the capacity to process five mpta of LNG, and require investment of around $1 billion. It eyes to start LNG imports by 2023 through floating storage & regasification unit (FSRU) and by 2024 from its onshore facility.

LT Group submitted a proposal to develop a three mtpa, 1.1-gigawatt (GW) integrated LNG-to-power project onshore Batangas for $735 million. The project would be developed with partner US-based Blackstone Group affiliate Gen X Energy and is projected to start importing by 2025.

US-based firm Excelerate Energy also secured government approval for its LNG hub in Batangas. It is targeting to start LNG imports by 2021, which would be supplied to SMC Power Holdings Corp.’s gas-fired power plants in Illijan under a memorandum of understanding (MoU).

The Malampaya gas project is responsible for all of the country’s current gas production and provides about 20 percent of the country’s annual electricity needs.

However, Malampaya’s supply is rapidly declining, with output expected to be depleted latest by 2027, based on industry estimates and the Department of Energy’s own projections.