First Gen plans LNG distribution expansion

Nov 02, 2020

Lopez-led First Gen Corp. is preparing a distribution plan to deliver liquefied natural gas (LNG) throughout the country ahead of the construction of its offshore terminal in Batangas. 

The listed energy company is now building a short-term LNG terminal that is expected to bring in imported natural gas to the Philippines as early as the third quarter of 2022.

“We are excited to democratize the use of natural gas in the Philippines using new technology to create small-scale LNG opportunities in the Philippines,” said First Gen Chief Commercial Officer Jonathan C. Russell in a press release.

The company targets new industrial, commercial, and remote customers who are not able to access natural gas given the heavy investment needed in building infrastructures such as transmission lines.

First Gen said it is taking the first step to realize the nationwide distribution of natural gas with a plan to install a remote, small-scale gas receiving, storage, and regasification facility in First Philippine Industrial Park (FPIP), one of the country’s largest industrial sites located in the Calabarzon region.

The 457-hectare industrial property will be connected to the import terminal, approximately 50 kilometers apart, through a “virtual pipeline” using ISO-certified containers and trucks to supply LNG, according to Mr. Russell. FPIP is a joint venture between First Gen’s parent First Philippine Holdings Corp. and Japan’s Sumitomo Corp.

“Several existing and potential new locators have expressed keen interest in using LNG and natural gas directly for various manufacturing process applications, and indirectly in the form of reliable, flexible, environmentally-responsible power,” said Francis Giles B. Puno, president of FPIP and chief operating officer of First Philippine Holdings, in the same release.

The company is still examining how it can distribute LNG across the country through small-scale LNG carriers.

Citing a recent report of the International Gas Union, First Gen said there is a “growing” interest in small-scale LNG around the world as its transportation to satellite regasification units is projected to “increase” due to economic development in areas unserved with natural gas pipelines.

A flexible supply of LNG to isolated communities can cut emissions and generate more demand for natural gas, it claimed. 

Earlier this month, First Gen awarded a construction contract to the Philippine unit of Australia- based McConnell Dowell Group to build its interim LNG terminal.

It has also sent out bid invitations to three of its preferred providers of a floating storage and regasification unit (FSRU) to be constructed as part of its terminal project. The bidders are BW Gas Ltd. of global gas shipping company BW Group, New York-listed GasLog’s unit GasLog LNG Services Ltd., and Hoegh LNG Asia Pte Ltd., owned by the Norwegian LNG carrier provider Hoegh LNG Holdings. It expects to have their offers submitted in mid-November.

The LNG terminal project came out of the joint development deal between First Gen and Tokyo Gas Co., Ltd. two years ago.

On Oct. 7, the two companies advanced their partnership after signing a joint cooperation deal to pursue the design, development, testing, commissioning, construction, ownership, and operations and maintenance of the project. This gives the Japanese firm a 20% interest in the project.

Once Tokyo Gas can make a final investment decision, it will enter into a definitive agreement with the local company.

Shares in First Gen fell by 1.04% to close at P28.50 each on Friday.