FGen budgets $810 million for capex until 2023

MANILA, Philippines — Lopez-led First Gen Corp. has earmarked a capital expenditure (capex) of $810 million until 2023, bulk of which will be used to complete its liquefied natural gas (LNG) terminal and geothermal projects, as well as expand its natural gas and hydropower platform.

During the virtual stockholders’ meeting yesterday, First Gen CFO Emmanuel Singson said the company is spending $550 million this year and $260 million next year, with most of it going to renewables subsidiary Energy Development Corp. (EDC).

He said EDC would continue to have a high capex level of $266 million this year and $141 million next year to fund its growth initiatives, drilling programs and upgrades.

“[This year,] 50 percent of the capex is allocated for EDC’s growth projects, specifically the 3.6-megawatt (MW) Mindanao 3, the 29-MW Palayan Bayan, 20-MW Tanawon plant, and energy storage, low enthalpy geothermal, silica extraction, wind energy projects,” Singson said.

EDC’s 2023 capex will be dedicated to its drilling programs, growth initiatives including Palayan Bayan, Tanawon and innovation projects, he said.

First Gen is also allotting $135 million in capex this year to complete its interim offshore LNG terminal in Batangas and $25 million next year to pay for transactions related to the terminal that closed in the previous year, Singson said.

First Gen president and COO Francis Giles Puno said the LNG terminal is on track for completion and operations by the fourth quarter.

“This LNG terminal is crucial to maintaining the supply of natural gas in the Philippines as indigenous sources run out. All of the main structural components of the terminal have arrived on-site, and installation is ongoing,” he said.

While the company is completing the LNG terminal, First Gen will purchase liquid fuel for its gas-fired power plants amid the persisting Malampaya gas supply restriction.

“Depending on Malampaya’s performance this year, we anticipate having a requirement of at least four million barrels of condensate. And for reference, so far this year, we’ve already imported one million barrels of condensate,” First Gen EVP and chief commercial officer Jon Russell said.

Last year, First Gen imported around 2.4 million barrels of condensate, substituting for 14 percent of the total gas fuel requirements Malampaya was unable to supply, he said.

For this year, Singson said the company is spending $30 million for the operations of the company’s existing gas plants.

First Gen chairman and CEO Federico Lopez said the company’s transition to a decarbonized future would be anchored in the next few years by efforts to bring in LNG in the country.

“When complete, our LNG terminal in Batangas City will allow us to import natural gas from around the world, thus providing consumers with clean, reliable electricity that will displace power produced by coal, even after our indigenous supply in Malampaya is exhausted,” he said.