Razon-led Prime Infrastructure Capital Inc. has inked a memorandum of understanding (MOU) with FGEN LNG Corporation of the Lopez group for the lease and operation of the latter’s liquefied natural gas (LNG) storage and regasification terminal for its gas aggregation business plan.

Beyond the MOU, it was noted that there are ‘no definitive agreements’ firmed up by the relevant parties as of this time.

The lease of the First Gen LNG Terminal, as affirmed by the Lopez company in a disclosure to the Philippine Stock Exchange (PSE), “will form part of Prime Infra’s proposed gas aggregation strategy that enables leveraging its existing Malampaya project facilities.”

As a business model, gas aggregation delves with consolidating gas demand of multiple end-users and their needs could be covered by a single purchasing entity, which is the role that Prime Infra will be taking.

It was opined that by consolidating the collective demand of a market, the gas aggregator-entity will gain enhanced bargaining power on gas procurements, hence, it would be able to purchase commodity at more favorable price or terms from gas suppliers or sellers.

Apart from production from the Malampaya field, the lease pact on First Gen’s import facility will enable Prime Infra to bring in LNG which it could then aggregate and sell to gas buyers in the country – including those for power plant applications as well as other end-users, such as industries and manufacturing facilities.

The LNG import facility of First Gen has been certified by the Department of Energy (DOE) as ‘energy project of national significance’ and was likewise granted a ‘certificate of energy project of national significance’ way back in 2019.

It was indicated that there will be some sort of value addition or diversification into the business model being cast by Prime Infra, that its gas market expansion will not just fully rely anymore on gas output from the Malampaya field but will also be complementing that with LNG importation.

It was specified that the agreement “embodies a mutual recognition by both FGEN LNG and Prime Infra of the need to ensure a steady and secure source of natural gas providing low-cost and sustainable baseload power through gas aggregation.”

Through that arrangement, it has been stipulated that “the aggregator enables the formation of a competitive gas market underpinned by the growth of the natural gas power generation capacity in line with DOE’s power development plan, the availability of LNG as a new fuel source, and the exploration for and commercial development of new indigenous natural gas fields.”

As highlighted, the Prime Infra-First Gen LNG terminal lease covenant is all in response to President Ferdinand Marcos Jr’s  “urgent call for significant undertakings to ensure national competitiveness.”

With the State-designed energy transition agenda that will usher in massive scale renewable energy (RE) installations in the country, gas will be providing the flexibility in the power system to ease unwarranted frequency excursions sparked off by the on-and-off generation of variable RE facilities – primarily solar and wind farm facilities.

Prime Infra itself is heavily investing in the RE space, and that has been initially cemented via the long-term power supply agreement (PSA) it had underwritten with power utility giant Manila Electric Company (Meralco) for the supply of all-renewables plus energy storage mid-merit capacity to the power distribution company.

FGEN LNG is a subsidiary of First Gen, which is currently one of the biggest independent power producers in the country that has portfolio leaning more on clean energy technologies – primarily RE generating assets plus its gas platform. ###