Lopez-led First Gen Corporation is seeking tenders from prospective international suppliers of liquefied natural gas (LNG) for its gas requirements that will cover the period from 2023 to 2027.
“The response of the market so far – although we haven’t selected suppliers yet – is very, very positive,” according to Jonathan C. Russell, executive vice president and chief commercial officer of First Gen.
Russell similarly disclosed that “in parallel, we’re in discussions with several LNG suppliers to seek what they call master sale and purchase agreement, which allows the spot purchase of LNG in addition to the term supply.”
He further announced that the construction completion and commercial operation of their interim offshore LNG import facility is “on track” by the fourth quarter of this year.
The First Gen executive noted that “securing the LNG supply alongside the completion of the LNG terminal will be critical to ensuring grid security and to support the development of renewables in the country.”
On the fuel shift of the First Gen plants from Malampaya gas to LNG, Russell indicated that
“we’re working closely with Meralco (Manila Electric Company) to guarantee a smooth operational transition from fuel source to just Malampaya and liquid fuel, to also include LNG.”
Meralco is the off-taker (capacity buyer) of generated electricity of First Gen gas-fired power plants – including the 1,000-megawatt Santa Rita, 500MW San Lorenzo; and 414MW San Gabriel power generating facilities.
Prior to the arrival of LNG into the country as anticipated by the latter part of this year, the First Gen plants will still need to switch to liquid fuel each time that the Malampaya field experiences gas production restrictions – which has actually been a recurring dilemma since 2020.
Russell affirmed that “gas from the field is now on decline,” but he qualified that “luckily, we have prepared for this situation and construction of the terminal will be completed by end of 2022.”
He emphasized “although we plan to utilize the LNG to supplement the Malampaya gas, in the meantime, as a result of increasing gas restrictions, we will heavily rely on liquid fuel.”
Last year, he conveyed that First Gen needed to import around 2.4 million barrels of condensate; and that somehow “substituted 14-percent of our total gas fuel requirements that Malampaya was unable to supply.”
Russell thus stated that “depending on Malampaya’s performance this year, we anticipate having a requirement of at least 4.0 million barrels of condensate. And for reference, so far this year, we’ve already imported 1.0 million barrels of condensate.”