Philippine needs policy, value chain for LNG development – experts

MANILA, Philippines - The Philippine government needs to institutionalize policies to be able to develop the needed supply chain to move forward the country’s liquefied natural gas (LNG) sector.

Financial institutions find it hard to finance potential LNG projects given the country’s lack of policy and value chain, Bank of Tokyo-Mitsubishi UFJ Ltd. first vice president Arthur Tay said in an interview at the LNG Forum yesterday.

He said completing the whole value chain and laying down policies to support the value chain is critical in propel the sector.

The LNG supply chain is composed of the source (exploration and production), liquefaction (conversion natural gas into liquid form), transportation and receiving and distribution (conversion of LNG back to its gaseous state).

“And only when all these elements are there, then you will have certainty how much LNG demand is going to be,” Tay said.

Determining the LNG demand is critical in getting financing to put up the expensive undertaking and that is not currently seen in the Philippines.

 “If long-term financing for a utility cost basis is the objective, then you know, the demand for the LNG need more certainty before banks are able to say in confidence ‘we can finance this’,” Tay said.

“As it stands, there’s a lot of questions that we ask about LNG demand, about the ability of the end user to use the LNG. You have so much new coal power, then there doesn’t seem to be a lot of space for LNG generation in the Philippines,” he said.

Earlier, the Department of Energy (DOE) said it laying down groundwork for an LNG policy, forming a A coalition composed of government agencies and private sector was formed to report on developments the LNG sector.

The agency, through its corporate arm Philippine National Oil Co. (PNOC), is initiating a study to establish a LNG terminal to ensure supply in light of the impending end of contract of the Malampaya deep water gas-to-power project in 2024.

In the private sector, the local subsidiary of energy giant Royal Dutch Shell and Lopez-led First Gen Corp., which have been vocal in pursuing LNG terminals in the country, are among the companies in the advanced stages in their respective LNG projects.