FGen eyes supply contracts  for Batangas LNG terminal

MANILA, Philippines — First Gen Corp. is conducting a tender to secure a liquefied natural gas (LNG) supply for its interim offshore LNG terminal in Batangas, which is set to be completed in the fourth quarter.

The company wants to secure contracts for its four-year supply and spot purchases of LNG, First Gen EVP and chief commercial officer Jon Russell said.

“In parallel, we’re in discussions with several LNG suppliers to seek what they call master sale purchase agreements, which allow the spot purchase of LNG in addition to the term supply,” he said.

Russel said First Gen  has so far  received “very, very positive” response from the market.

“As you know, securing the LNG supply alongside the completion of the LNG terminal will be critical to ensuring grid security and to support the development of renewables in the country,” he said.

Company officials said the interim offshore LNG terminal in Batangas — which is being developed by subsidiary FGen LNG Corp. in partnership with Tokyo Gas — is on track to be completed by the fourth quarter.

FGen LNG has executed time charter party agreements with the BW Group of Norway and Svitzer of Switzerland, First Gen president and CEO Francis Giles Puno said.

“BW will provide a floating storage and regassification unit (FSRU) with a nominal send-out capacity 25 percent greater than Malampaya’s maximum gas capacity. Svitzer will supply and operate four new heavy-duty tugboats that will manage the safe arrival and departure of the FSRU and LNG carriers,” he said.

An FSRU is a liquefied natural gas carrier (LNGC) that can store LNG, and which has an onboard regasification plant capable of returning LNG into a gaseous state and then supplying it directly into the gas network. A typical FSRU has a storage capacity of between 125,000 cubic meters and 170,000 cubic meters.

To complete the LNG terminal, First Gen is allotting $135 million for capex this year. It has also set a $25-million capex for next year to pay for related transactions that closed in the previous year.

“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,” Puno said.

Due to the persisting Malampaya gas supply restriction, First Gen will purchase at least four million barrels of condensate to run its gas-fired power plants.

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

First Gen’s LNG terminal was originally an onshore facility targeted for completion in 2024, but the company revised plans to add an FSRU to be able to bring in LNG earlier than originally planned.

The company’s four gas-fired power plants — the 1,000-megawatt (MW) Santa Rita, 500-MW San Lorenzo, 97-MW Avion and 414-MW San Gabriel plants — get their fuel from the Malampaya gas project.

Malampaya’s contract will end in 2024, but supply from the gas field is projected to be depleted this year or latest by 2027.

“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 energy that will also displace power produced by dirty coal, even after our indigenous supply in Malampaya is exhausted,” First Gen chairman and CEO Federico Lopez said.