FIRST GEN Corp. has placed the capital expenditure for its proposed floating storage regasification unit (FSRU) at $300 million, or a fraction of its budget for the construction of a liquefied natural gas (LNG) import terminal, its president said.
“[Ang] advantage lang is our capex spent from $1.3 billion [is down] roughly [to] $300 million ang para sa (for the) FSRU,” First Gen President and Chief Operating Officer Francis Giles B. Puno told reporters last week when asked to give an update of the project.
“But it doesn’t include lease payment for floating regas terminal,” he added.
The Lopez-led energy company previously estimated the cost of its planned import terminal to go beyond $1 billion, but in September, it announced a partnership with Japan’s JGC Corp., which will handle the engineering, procurement and construction (EPC) of the LNG terminal project in Batangas City.
First Gen said the immediate focus of the partners was to complete a detailed study on modifications that can be made to First Gen’s existing jetty that would allow the facility to receive large- and small-scale LNG vessels, and to continue to receive liquid fuel.
“We are working with JGC in completing the requirement of potentially shifting to FSRU in the interim… Main reason for that is to enable us to deliver gas earlier,” Mr. Puno said.
First Gen earlier said that building the LNG terminal is crucial to ensure the continued operations of the country’s 3.2-gigawatt existing natural gas-fired plants given the expected and continuing reduction in gas supply from the Malampaya field up to the expiration of the contracts by 2024.
“Main reason why that is advantageous to us is because the prices of LNG today are quite attractive and even cheaper than Malampaya,” Mr. Puno said. “If we can bring in gas lower than Malampaya, it is really good for consumers.”
First Gen has yet to sign a contract to buy LNG from foreign suppliers, although talks remain with possible sources, he said.
“Right now, current Malampaya prices is at $9 per million BTU (British thermal unit),” he said.
He cited India as having auctioned LNG at an estimated range of $6.30 to $6.70 per million BTU, a price that is already cheaper than Malampaya, and even competitive with the price of coal.
Mr. Puno said First Gen targets to lease the FSRU vessel by the first quarter of next year. The FSRU will allow the company to receive LNG as early as 2021, or before the expiration of the Malampaya gas contracts.
The planned LNG storage ship has an onboard regasification plant capable of returning the liquefied fuel back into a gaseous state. The gas can then be supplied directly to some or all of the company’s existing power plants.
The entry of JGC came after First Gen in December 2018 signed a joint development agreement with Tokyo Gas Co., Ltd., which is taking a 20% participating interest in the project. This was a preliminary agreement between the parties to jointly pursue development of the LNG terminal.
In March 2019, FGEN LNG received the formal approval of its application for a “notice to proceed” (NTP) from the Department of Energy as defined in and required by the Philippine downstream natural gas regulation. The unit had requested the agency to extend its NTP by a further six months.