FGen in talks with LNG suppliers

MANILA, Philippines — Lopez-led First Gen Corp. is in talks with over 20 potential suppliers for its liquefied natural gas (LNG) project in Batangas.

In an interview Tuesday, First Gen executive vice president and chief operating officer Jonathan Russell said they are in active discussions with various gas suppliers for its LNG terminal, but are not in a hurry to close deals yet.

“I think we are talking in excess of 20 different suppliers and there is no immediate need to make a decision today,” he said.

First Gen is looking for a supplier that will recognize the unique gas requirements of the Philippines.

“We want to get the most flexible terms not just the lowest price because moving forward, the  role of natural gas will be in a flexible mode to support the introduction of intermittent sources like solar,” Russell said.

The company official said most gas contracts are usually long term, from seven to 15 years, but there are some short term deals emerging in the market to cater to the needs of buyers.

First Gen is looking at securing two supply contracts—one for long-term for its LNG terminal and another for the short-term for its floating storage and regassification unit (FSRU).

“Maybe the way to think about that is we separate the discussions for the long term which is for 2024 onwards and also for the short term, if we execute the plan to bring in an FSRU then we might bring in LNG as early as 2021 to 2024,” Russell said.

“The immediate focus is on looking at the start of construction of terminal and the supply of LNG will parallel with that,” he said.

The Lopez firm is working on a feasibility study to modify the jetty in its First Gen Clean Energy Complex (FGCEC) in Batangas to be able to accommodate FSRU, which would have a capacity of around 170,000 cu.m.

It is targeting to bring in LNG supply with the FSRU as early as 2021, way ahead of the expiration of the Malampaya gas contracts in 2024.

This is also intended to meet the government’s request to start importing LNG supply within the Duterte administration.

An FSRU is an LNG storage ship that has an onboard regassification plant capable of converting LNG back into a gaseous state. This can then be supplied directly to some or all of First Gen’s existing power plants, should Malampaya be unavailable for any reason.

First Gen had recently selected JGC Corp. of Japan after an extensive engineering, procurement and construction (EPC) tendering phase which commenced in 2014 for its LNG terminal project.

Once the study is completed, First Gen will start construction of the modified jetty with JGC as its EPC contractor.

Meanwhile, First Gen’s LNG terminal is intended to serve the natural gas requirements of existing and future gas-fired power plants of third parties and FGEN LNG affiliates within the Batangas Clean Energy Complex.