DOE eyes 13 MTPA capacity in LNG terminals

Published July 12, 2021, 6:00 AM

by Myrna M. Velasco

The Department of Energy (DOE) is targeting 13 million metric tons per annum (mtpa) of liquefied natural gas (LNG) capacity that will be imported into the country via the various investments being proposed by private sector players.


Jesus T. Tamang, director of the DOE’s Energy Policy and Planning Bureau, noted that aside from renewable energy, capital flow in the energy sector will likely be dominated by gas – primarily for LNG import facilities, as well as new wave of investments for gas-fired power facilities.



“The power sector is expected to have a structural change toward greatest share of natural gas, RE and other technologies for power generation,” the energy official said.



The energy department previously issued notice-to-proceed (NTP) to several LNG import terminal projects – including those of First Gen Corporation, American firm Excelerate Energy; AG&P, Batangas Clean Energy project of tycoon Lucio Tan; A. Brown Company Inc. and Shell Energy Philippines.



The proposed facilities of the investors will initially lean on floating storage and regasification unit (FSRU); but there are other project-proponents eyeing to set up longer term onshore LNG terminals.



In that LNG investment race, the project-sponsor firms eyeing to come on-line first by next year are Excelerate Energy by the second quarter of 2022; and the joint venture of Lopez-led First Gen and Tokyo Gas Co. Ltd. by the third quarter.


Next year is perceived as a crucial ‘transition phase’ for the Philippine gas sector – because that is the point when substantial production decline at the Malampaya field will already come off, hence, the supply of gas has to be plugged by imported LNG.


On DOE’s reckoning, the advancement of the various LNG import facility ventures will usher in the rebirth of the country’s gas market – a shift from the utilization of indigenous gas to joining the LNG importers’ club as well as users around the world.


Compared to many of its neighbors within the Southeast Asian region, the Philippines is still relatively considered a “latecomer” when it comes to investments in import facilities in the LNG space, but this solution is finally tugging its way into the country’s energy mix.


With the ongoing infrastructure development build-up of the country and its well-anticipated economic rebound post-Covid, electricity supply had been growing thin – and that started manifesting extremely this year with the bout of power outages that distressed Luzon consumers during the summer months.


Given such scenario in the power system, investors like First Gen already started deciding on greenfield power projects that shall be integrated into their LNG ventures – and that will be via the proposed Santa Maria power project which is targeted for completion in 2024-2025, the same timeframe as the anticipated power supply-demand equilibrium in the country.


The Philippines currently has five gas-fired power facilities with aggregate capacity of 3,200MW. Four of these assets belong to First Gen (the 1,000MW Santa Rita, 500MW San Lorenzo, 414MW San Gabriel and 97MW Avion plants); while the 1,200MW Ilijan gas-fired power fleet is currently administered by South Premiere Power Corporation, a subsidiary of San Miguel Energy Corporation.


For First Gen, gas would be the much-needed capacity addition to the country’s power mix given government-laid policies of more renewable energy grid integration with the implementation of the Renewable Portfolio Standards. The flexibility of gas-fired plants is the much-needed complement to the intermittency of RE technologies like wind and solar, according to the company.


It wasn’t exactly an easy journey for the country to reach the LNG investment sphere, according to Energy Secretary Alfonso G. Cusi, who started inviting investors on this facility development way back in 2017.


The DOE initially envisaged a development strategy ushered in by state-owned Philippine National Oil Company (PNOC), but since it cannot get its grip with the right investor-partner, the energy chief opted to award the projects to interested private investors.

 
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