First Gen and Tokyo Gas set to build $1-b LNG hub

By Alena Mae S. Flores – May 19, 2019 at 08:00 pm
from manilastandard.net

First Gen Corp. and partner Tokyo Gas of Japan will hold a traditional Japanese “Kagami Biraki” groundbreaking ceremony for the $1-billion liquefied natural gas terminal in Batangas on May 28.

First Gen president Francis Giles Puno said the ceremony would mark the completion of the pre-development works on the L1w, “as symbolized by the act of breaking open a round sake barrel, representing harmony and good luck, by hitting the lid with wooden mallets.”

“In partnership with Tokyo Gas, we are working hard to firm up our LNG regasification terminal investment that is intended to ensure that our country can meet its future growing energy needs utilizing clean low-carbon natural gas. Our LNG site in Batangas is now construction-ready,” Puno said.

First Gen owns an 80-percent stake in the LNG project while Tokyo Gas took a 20-percent stake.

First Gen is building the LNG terminal at its energy complex in Batangas which houses natural gas plants including the 1,000-megawatt Santa Rita Power Plant, the 500-MW San Lorenzo Power Plant, the 414-MW San Gabriel Power Plant and the 97 MW Avion Power Plant.

All these natural gas plants are fueled by the Malampaya gas project in northwest Palawan, whose contract with the government will expire by 2024.

Puno said that after having received the notice to proceed from the Energy Department in March, First Gen would commence the next stage of development works to bring the company to a final investment decision by late 2019 or early 2020.

First Gen is choosing between foreign contractors Fluor and JGC Corp. for the engineering, procurement and construction contract of the LNG terminal with a capacity of 5 million metric tons.  Completion of the project is expected by 2024.

“We are currently finalizing our EPC tender process. We hope that we will finish that within the next couple of months and after that we need to make a decision whether to continue with more early start works but hopefully leading to an investment decision either late this year or early this year,” Jon Russel, First Gen executive vice president and chief operating officer, said earlier.

“That still allows us to meet the deadline to have the terminal ready when the Malampaya contract expires in 2024. So we wanna be ready to have a seamless transition from one to the other,” Russel said.

“The FEED [front end engineering and design] is already finished…It’s really just finalizing the contracting terms. It’s down to two bidders—Flour or JGC. We hope we will make the decision in the next couple of months,” Russel said.

Russel said First Gen was also in advanced discussion with a number of possible partners for the LNG project.

“It’s possible that in the near future we will announce additional partners that are coming on board. Within the next months, we may have additional announcements. We are trying to find a coalition of the willing—the best grouping of entities who can make this project a success,” Russel said.

“We can accommodate more than one partner. It’s just a question of trying to choose partners that add the most value and also will be easy for us to work with the group and a strong combination,” he said.

Puno said First Gen was willing to bring down ownership in the project to 50 percent or 51 percent.

“Right now we have 80 percent, Tokyo Gas 20 percent, but we don’t intend to own the entire 80 percent. We can go down to 50 percent, 51 percent,” Puno said.

“The way it works is that we anticipate that we will bring in more partners. In the meantime, between ourselves and Tokyo Gas, we want to proceed already so the formal FID will entail a bigger, hopefully, a complete group of owners.  But in the meantime, between ourselves and Tokyo Gas we will go and ground break already because obviously, we should continue the momentum,” he said.

First Gen and Tokyo Gas signed a joint development agreement for the project in December last year.