The Department of Energy (DOE) ordered infrastructure development firm Atlantic, Gulf and Pacific Company (AG&P) to submit written justification on the deferred commercial operation date (COD) of its liquefied natural gas (LNG) terminal project.

The LNG import facility has been targeted for commercial operations around August this year, but due to recent developments in the international gas market triggered by the prolonged Russia-Ukraine war as well as the snags on project construction wrought by the coronavirus pandemic, the company recently informed the energy department that its project completion will be stretched to yearend.

According to Atty Rino Abad, director of the DOE’s Oil Industry Management Bureau (OIMB), the key executives of AG&P already met with the department recently and informed the agency of the adjustment of the LNG project’s commercial commissioning.

Taking cue from that then, the DOE has directed AG&P to formally send a letter to Energy Secretary Raphael P.M. Lotilla that must set forth the justification “why the original date (of COD) was not complied with.”

In addition, the energy official indicated that AG&P shall provide “detailed list of pending activities with timeline and justification as basis for review and approval of the requested extension.”

Abad emphasized that there’s no need for AG&P to apply for an extension of its project license, because its permit to construct, expand, rehabilitate and modify (PCERM) for downstream natural gas facilities would still be valid until December this year.

Around February this year, AG&P inked an 11-year charter agreement with ADNOC Logistics and Services (ADNOC L&S) of the United Arab Emirates (UAE) for the supply, operations and maintenance of a floating storage unit (FSU) that will be installed at the former’s LNG facility in Batangas.

Project-sponsor firm AG&P noted that the vessel to be chartered will be the ISH of ADNOC L&S, which is a 137,512 cubic meter floating storage unit.

Beyond the 11-year preliminary phase of the chartering deal, it was stipulated that the contract has an option for four-year extension on the consent of the relevant parties.

As culled from the blueprint of AG&P’s LNG import facility that had been submitted to the DOE, the installation sets a two-phased investment platform which will start with an offshore import facility with an initial capacity of 5.0 million tonnes per annum; then the longer term infrastructure development will be an onshore terminal.

The major gas off-takers of the AG&P LNG import facility will be the existing 1,200MW Ilijan gas plant of the San Miguel group; as well as its 1,200MW greenfield gas-fed power plant project that will be on-line commercially by 2024.

Both gas-fired power facilities have long-term power supply agreements (PSAs) with Manila Electric Company (Meralco) – with the existing Ilijan plant having a 10-year power supply contract; while the new Ilijan-2 plant has a 20-year off-take contract with the giant power utility for its generated electricity.