Government clears First Gen's natural gas venture

MANILA, Philippines — The energy department gave the go-signal to First Gen Corp. to construct a liquified natural gas facility in its Batangas plant.

The Lopez-led company disclosed to the stock exchange on Friday that the company secured a permit to construct, expand, rehabilitate and modify from the government last Sept. 23 to FGEN LNG Corp., a subsidiary.

With the permit, First Gen can now proceed with construction of the project beginning this or next quarter when plant’s design and work protocols to prevent coronavirus infection are expected to be finalized. 

The permit allows First Gen to modify an existing jetty in its Batangas plant to accommodate natural gas, and build an “adjunct” receiving facility in the area. The plant, which reportedly costs between $200-$400 million, is seen operational by the third quarter of 2022.

“FGEN LNG believes the Project will play a critical role in ensuring the energy security of the Luzon Grid and the Philippines, particularly as the indigenous Malampaya gas resource is expected to be less reliable…,” the company said in a statement. Malampaya natural gas off Palawan, currently the source of about 40% of Luzon’s power, is expected to be depleted as early as 2027. 

“The entry of LNG will encourage new power plant developments as well as industrial and transport industries to consider it as a replacement to more costly and polluting fuels,” First Gen added.

Under the government’s own energy plan by 2040, 12.4% of the country’s energy needs are projected to be sourced from natural gas, more than double the 6.1% share as of 2017, the latest period on which data is available.

As part of First Gen’s latest undertaking, the firm said selection is also ongoing between three players, one of which will be awarded a contract to build the facility’s LNG store and regasification services in Batangas. 

Currently, First Gen owns and operates 30 power plants across the archipelago, with 3,492 megawatts of installed capacity, powering 21% of the Philippines’ gross generation as of end last year.

Shares in First Gen closed at 23.60 apiece and end the trading week down 1.46%, following the resignation of Eugenio Lopez III as chair last Thursday. The main index, meanwhile, slipped 0.12%.