LNGPH considers third tank to strengthen gas platform

From AB Capital's The Opening Bell: Three Moves

Event

LNGPH, a consortium of MGEN, AP and SMGP, is considering a P6 billion third onshore LNG tank in Batangas, adding 180,000 cubic meters of storage and reducing reliance on floating storage.

View

Additional onshore storage would improve fuel security for the consortium's gas-fired plants, reducing exposure to vessel-related disruptions. However, it would offer limited direct cost relief amid high global LNG prices, with fuel costs generally passed through under existing arrangements. The larger opportunity is expanding gas-fired capacity and utilization.

Catalyst

Excellent Energy Resources (EERI), LNGPH's subsidiary, is among 10 prequalified bidders for the DOE's auction of more than 3,800MW of mid-merit gas capacity. Winning projects could drive incremental demand for LNG and support utilization of the consortium's terminal.

Action

We maintain our Outperform ratings on AP and MER. The auction offers the clearest potential earnings catalyst for the consortium, while the proposed tank strengthens the infrastructure supporting future growth. We would look for capacity awards and utilization gains before attributing value to the expansion.

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