LNG projects face delays, says DOE

Published August 23, 2021, 6:30 AM

by Myrna M. Velasco

The construction completions of several offshore liquefied natural gas (LNG) import terminal projects in the country are facing slight delays because of the Covid-related mobility restrictions, according to a status report issued by the Department of Energy.

The DOE reckoned that LNG facility operations committed for the second quarter of 2022 had been skidding to third quarter; while those eyeing to be on commercial stream by third quarter are already being moved to fourth quarter.

In particular, the department noted that the floating storage regasification unit (FSRU) venture of American firm Excelerate Energy L.P. is sliding commercial operations target to third quarter 2022 – from its original timeline of second quarter 2022.

The agency qualified that it allowed at least two extensions on the notice-to-proceed (NTP) permit of Excelerate Energy, or the license being issued by the DOE for LNG investments in the country.

“The DOE granted two NTP extensions – the first, which was valid for six months as allowed by the Philippine Downstream Natural Gas Regulations, was issued on May 27, 2020,” the department specified.

The DOE added “the second, due to force majeure brought about by the Covid-19 pandemic, was issued on December 16, 2020 and was valid for three months.”

The energy agency emphasized then that on the basis of those NTP requests for extension, the estimated commercial operation date (COD) of Excelerate Energy’s LNG import facility will drift to third quarter next year.

“The department is evaluating Excelerate’s permit-to-construct application, while the company is securing the necessary permits from other concerned government agencies and financial closing prior to construction,” the DOE said.

Another FSRU LNG project that will glide slightly on its commercial completion is that of First Gen Corporation, which the company indicated to be moving to fourth quarter of 2022, from previous windup date of third quarter.

The LNG project of Atlantic Gulf & Pacific Company (AG&P), still retains completion date target by second quarter 2022; but the DOE conveyed the sponsor-firm has yet to finalize its application for permit to construct, expand, rehabilitate and modify (PCERM) and that there is already initial manifestation that it will seek for extension on its implementation timeframe.

The other gas import facilities closely monitored by the DOE on their project developments are those of Shell Energy Philippines, Vires Energy Corporation and Energy World Gas Operations Philippines Inc.

The crucial timeline for the country on its need for additional gas supply will be second quarter of next year — because that will be the period when the gas sale and purchase agreement (GSPA) of the 1,200-megawatt Ilijan gas-fired power facility with the Malampaya field operator will expire.

Energy Secretary Alfonso G. Cusi asserted that he pushed for the developments of LNG import facilities “in anticipation of the eventual depletion of the Malampaya deep water gas-to-power project which has been providing about 20-percent of the country’s power needs.”

As shown from current developments, the Malampaya gas production facility may already be confronted with faster rate of depletion starting next year, therefore, LNG importation will be the next best recourse for the country’s gas-fired power plants.