MVP Group explores posibility of building own LNG terminal

MANILA, Philippines — Companies led by businessman Manuel V. Pangilinan have joined forces to explore the possibility of developing their own version of a liquefied natural gas (LNG) terminal amid the mounting need to support the country’s gas-fired plants to continue providing power supply.

Pangilinan said Manila Electric Co. (Meralco) and Metro Pacific Investments Corp. (MPIC) are conducting a study on building an LNG terminal in light of the expected depletion of the Malampaya deep water gas-to-power plant by 2024.

“It takes a minimum three years to build a gas terminal, a minimum of 10 years to build a gas field. So we are slowly hitting the wall if we don’t move,” he said.

Pangilinan said the study would include whether they would pursue an onshore facility or a floating storage and regassification unit (FSRU).

He said the study could be finished “early next year” since the output of the Malampaya project is expected to start declining by 2022.

“(We need the LNG terminal) as soon as feasible. Hopefully the gas terminal will be ready by that year otherwise you either have no power or use (more expensive) gas, but the cost of your power output will be high,” Pangilinan said.

The group has tapped consultancy firm McKinsey & Co. for advisory on power generation investments, renewables, and LNG.

“We have engaged McKinsey. They’re at it for so many months already. We see all sorts of numbers here and there. It’s not an easy problem that’s why I can appreciate why government is taking time to decide,” Pangilinan said.

McKinsey is a global management consulting firm that serves a broad mix of private, public, and social sector institutions. Among its services include electric power and natural gas to help businesses “rethink strategies, build capabilities, and pursue new opportunities.”

The group, however, has yet to inform the Department of Energy (DOE) of its interest in building an LNG terminal.

DOE is accepting letters of intent (LOI) from companies interested to build the LNG terminal under the Philippine downstream natural gas regulation (PDNGR), which details the rules and regulations governing the downstream natural gas industry.

So far, the agency has received interest from 13 companies—both local and foreign—to develop the country’s LNG integrated terminal.

The DOE plans to start constructing the country’s LNG hub by mid-2019 to safeguard against the anticipated contract expiration of the Malampaya gas facility.

The facility is also targeted to become an LNG hub for Asia, complementing those in Japan and Singapore.

Meralco had previously looked into the possibility of investing in LNG, which is a natural gas converted into liquid for ease of storage or transport.

In 2015, Meralco was in talks with Osaka Gas Co. Ltd., Japan’s second largest natural gas supplier, for a possible development of an LNG facility.

At that time, Osaka Gas was doing a feasibility study on a planned $2-billion, 1,500 megawatt (MW) gas-fired power plant project with Meralco.

In 2016, however, Meralco said the lack of a firm energy mix policy, demand, and favorable pricing levels had stalled  plans to enter the LNG space.