More firms seek role in govt LNG project

By Lenie Lectura – March 18, 2018
from Business Mirror

THE Department of Energy (DOE) has received additional proposals from two firms interested to put up an integrated LNG facility in the country, following the issuance of the downstream natural gas industry policy.

DOE Assistant Secretary Leonido J. Pulido III said Vires Energy Corp. and another firm, Carmine, submitted letters of interest.

“It’s Fgen, Cleanway, CNOOC, Tokyo Gas, Carmine, Vires and PNOC,” Pulido said.

Tokyo Gas, China National Offshore Oil Co. (CNOOC), First Gen Corp. and Cleanway earlier submitted letters of interest.

Last week Energy Secretary Alfonso G. Cusi said a total of six to seven firms expressed interest to put up an integrated LNG facility that include storage, regasification and distribution.

Pulido said the firms also requested for preliminary conference. After which, the firms are expected to submit a formal application.

The DOE earlier issued Department Circular 2017-11-0012, or the “Rules and Regulations Governing the Philippine Downstream Natural Gas Industry.” Stakeholders have waited for the issuance of a gas policy to guide them in pursuing this capital-intensive project.

“Essentially, it allows rules that would determine who among several stakeholders can have the authority to put up the LNG integrated facility,” Pulido said. “Under this, our government corporations will just be one of several competitors to make it more efficient and make the system more orderly.” The letters of interests were submitted to the DOE. Pulido said these proposals are separate from what the companies have also submitted to the Philippine National Oil Co. (PNOC), which intends to put up a $2-billion LNG terminal.

Earlier, PNOC said it received offers from First Gen, Energy World Corp., PT Jaya Samudra Karunia, PT PGN LNG Indonesia/PT Bosowa Corporindo with local partner MOF Corp., Korea Electric Power Corp., Lloyds Energy Group and CNOOC.

Under the department circular, PNOC, or its unit PNOC Exploration Corp. (PNOC-EC), may acquire at least a 10-percent stake in the LNG project.

“PNOC wants to be an operator but needs a partner to do it. So it is looking for one now,” Cusi said. “So, PNOC will be competing. Its advantage is the franchise for the pipeline.”

Pulido added that based on the rules, the LNG terminal’s power plant component can be 100-percent owned by foreigners, although the public utility component is subject to the constitutional limitation of 40-percent foreign ownership.

Under the rules, excess capacity of the LNG terminal, transmission system, distribution system and other services offered by the operator should be made available on a transparent and non-discriminatory basis to third-party users.  Pulido added the DOE natural gas evaluation committee will decide which proposal is best. “The policy does not allow the DOE to say that there’s only one investor that should be designated in one area, but we are studying whether if we should do that.” The LNG project should be completed before the expected depletion of the Malampaya offshore gas find near Palawan island in 2024.

LNG is natural-gas that has been converted into a liquid state for easier storage and transportation. Upon reaching its destination, LNG is regasified so it can be distributed through pipelines as natural gas.

Cusi said the government is aiming to turn the Philippines into a hub for LNG, amid a depletion of natural gas from the Malampaya gas field in Palawan in less than a decade. Currently, around 3,500 MW of power plant capacity is dependent on the country’s sole natural gas source.

The DOE has scheduled the groundbreaking for the country’s first LNG hub in 2018, with project completion still being eyed within the six-year term of President Duterte.