Lopez-led First Gen Corporation is awarding the contract for its procurement of one cargo of liquefied natural gas (LNG) to Shell Eastern LNG, a subsidiary of multinational energy giant Royal Dutch Shell.
“First Gen concluded its international tender for its first LNG cargo by awarding a contract to Shell Eastern Trading (Pte.) Ltd.,” the Lopez firm has disclosed to the Philippine Stock Exchange (PSE) via a press statement.
Based on the outcome of the bid, the Lopez firm emphasized that “Shell Eastern LNG will supply one LNG cargo of approximately 154,500 m3 (cubic meters) -- subject to an operational tolerance of +/- 3%; within the required delivery window of August 1 to September 30, 2023.”
The LNG has been contracted on a delivered ex ship (DES) basis; hence, the commodity will be valued or priced upon unloading at First Gen’s LNG import facility.
“The LNG cargo to be provided by Shell Eastern LNG will be delivered by an LNG carrier which will facilitate the gassing-up and cooling-down of the BW Batangas FSRU and transfer the LNG cargo into the storage tanks on board the BW Batangas FSRU (floating storage regasification unit) at Subic Bay,” the company said.
First Gen qualified that the BW Batangas will eventually “return to the FGEN LNG terminal in Batangas, to complete commissioning activities;” and that process is seen completed by August to September this year.
The purchased LNG will be utilized for the gas-fed power fleets of First Gen in Batangas to prepare them on their propounded shift to LNG due to the well-anticipated depletion of the country’s Malampaya gas field.
That LNG investment route was embraced by the Lopez group, because there is no certainty that new gas reserves can still be extracted from the Malampaya field despite the license extension granted to the project-consortium.
“The FGEN LNG terminal will accelerate the ability to introduce LNG to the Philippines, to serve the natural gas requirements of existing and future gas-fired power plants of third parties and FGEN’s affiliates,” the company noted.
With the energy transition agenda being advanced by the Marcos administration, gas is seen as the "perfect match" for the targeted massive scale renewable energy (RE) installations that will reign in the country’s power mix in the decades to come.
“FGEN believes the FGEN LNG terminal will play a critical role in ensuring the energy security of the Luzon grid and the Philippines,” the Lopez company stressed.
First Gen previously announced its plan to lease its LNG terminal to Razon-led Prime Infrastructure Capital to support the latter’s foray into "gas market aggregation", but there are no details yet how that business plan can be concretized.