As the country’s energy insecurity has been turning into an even more distressing situation because of the depletion of its sole commercial gas field, the Department of Energy (DOE) has granted go-signal to the proposed development of a small-scale liquefied natural gas (LNG) terminal in Mariveles, Bataan to be undertaken by start-up firm Samat LNG Corporation.

According to the energy department, the proposed facility will cost $67 million (roughly P3.6 billion). The terminal is targetted to start commercial operation in the first half of next year.

The project blueprint submitted to the DOE fleshed out that the LNG receiving terminal will have handling capacity of 200,000 to 400,000 tons of LNG annually; and “it is expected to supply LNG to fuel small-scale independent power producers, manufacturing companies, and transport fleets.”

The sponsor-firm is headed by Roy T. Watson, who logged more than two decades of work experience in the LNG markets of Southeast Asia; although his company is still practically a newcomer-player in the Philippine energy sector.

The parent company of Samat LNG Corp is Singapore-headquartered Tectoroe Pte. Ltd. which was incorporated in 2002 and its main line of business is into ship management services.

The major shareholder in Tectoroe is GoLNG Asia Pte. Ltd (GAPL), which has 97.5-percent equity and it is another company incorporated in Singapore; while Starbright Asia International Ltd. (SAIL) led by British finance executive Roger Bartlett has minority stake of 2.5-percent.

As emphasized by DOE, the notice-to-proceed (NTP) given to Samat LNG will allow the project-developer firm “to obtain the required regulatory permits from other government agencies and secure financial closing for the construction of the proposed LNG receiving terminal and regasification facility.”

The business model cast by Samat LNG leans on break-bulk distribution of LNG to target-customers through the use of dedicated LNG truck fleets as well as small LNG vessels and barges.

“Small-scale LNG terminals, which are modular and can be constructed quickly, are ideal for an archipelagic nation such as the Philippines,” the DOE explained, adding that this “can supply fuel for off-grid and on-grid capacities.”

Most, if not all, of the LNG projects already approved by the government and under construction in the country are already delayed - if reckoned on their respective completion dates of 2021-2022 as previously committed to the DOE.

Apart from Covid-strained timeline on their project developments, the LNG terminal proponent-companies are also saddled with dilemmas on their commodity procurements due to the gas crisis precipitated by the Russia-Ukraine war.

Despite the investment snags, the DOE qualified that LNG is “an important source for fuel diversification as this will complement the efforts of the Malampaya consortium to optimize the sustainability of the remaining indigenous gas in the Malampaya-Camago reservoir.”

It noted that the government’s primary concern is to guarantee that “enough capacity is supplied through various sources, especially in the coming summer months, to sustain the power supply in the country.”