DOE set to approve Tan’s ₱37-B LNG terminal project

Published December 8, 2019, 12:00 AM

by manilabulletin_admin

By Myrna M. Velasco

The Department of Energy (DOE) is due to approve the $735 million or ₱37.345 billion onshore liquefied natural gas (LNG) import terminal project of the Lucio Tan Group.

According to a highly placed source at the energy department, the LNG terminal venture which will also have power plant component of up to 1,100 megawatts had already been forwarded to Energy Secretary Alfonso G. Cusi for his final approval. The next step is the issuance of the notice-to-proceed (NTP), which is the license equivalent that the project developer will need to advance to the project’s implementation.

The project to be undertaken by Lucio Tan Energy and Resources, Inc. will be in partnership with US firm Gen X Energy, an affiliate company of multinational private equity firm Blackstone Group.

The onshore LNG terminal to be located in Pinamucan Ibaba in Batangas City is targeting a capacity of 3.0 mtpa, which is more or less the same as the proposed scale of the other LNG import facility-project proponents. The proposed investment cost at $735 million though is comparatively lower than the propounded capital spending of competitors.

The Lucio Tan Group has indicated to the DOE that it will bundle up the gas terminal with a power plant project of 1,000 to 1,100-megawatt capacity and shall serve specified markets including the Asia Brewery and Tanduay distillery facilities of the conglomerate.

Additionally, the project sponsor will be offering its power-generated capacity to other industries in the area, including the petrochemicals facility of JG Summit Holdings of the Gokongwei Group.

On a wider market perspective, it was also stipulated that the power plant development of the Lucio Tan group will be joining the competitive selection process (CSP) for power supply agreements (PSAs) that power utility giant Manila Electric Company (Meralco) and other distribution utilities will be undertaking.

The targeted completion of the LNG terminal will be year 2025 and based on the project blueprint, construction will take three to four years which is due to kick off in 2021.

The LNG terminal project of the Lucio Tan Group will prospectively be the fourth one to be issued with NTP by the DOE – and the ones that had gone ahead in the race included Tanglawan Philippines LNG, Inc. of Uy’s Phoenix Petroleum and China National Offshore Oil Corporation; FGEN LNG Corporation of Lopez-owned First Gen Corporation and Tokyo Gas Co. Ltd.; and that of US firm Excelerate Energy.

The NTP is initially good for six months then the project developer could seek for extension of another six months – such as what the other project developers had already resorted to.

Within that one-year timeframe, the DOE is expecting that the LNG import facility project proponent would already reach final investment decision (FID) and would eventually secure its permit-to-construct, which is the next phase of project implementation entailing seriousness that the proposed venture will really reach commercial fruition.