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Philippines aims to issue permit for $2 billion LNG facility in 2018

As published on UKReuters

MANILA (Reuters) - The Philippines is aiming to next year award the permit to build and operate the country’s first facility for receiving and distributing liquefied natural gas, its energy secretary said on Tuesday.

The project, estimated to cost $2 billion, comes as the Southeast Asian nation seeks to replace depleting local gas reserves that now produce around a fifth of its power.

Dozens of domestic and foreign companies are looking to get a stake in the project, including investors from China, Japan, South Korea and Russia, Energy Secretary Alfonso Cusi told reporters.

To ensure the project’s viability, Cusi said the government intended to initially allow only one such LNG facility, with state-owned Philippine National Oil Company (PNOC) holding a minimum stake of 10 percent.

“More than 50 (companies) have signified to PNOC their intent to participate in the project,” Cusi said after issuing new regulations that he hopes will smooth the development of both the facility and the wider LNG sector in the Philippines.

“This long-awaited circular (on the new rules) will guide all the players to ensure one common standard, safety in transport, in distribution, in all aspects, and to make sure that the interests of consumers are protected,” he said.

Construction of the project, which includes a 5 million tonnes-per-annum storage facility, will take about 30 months to complete, Cusi added.

“We want it up and running in three years ... We won’t wait for the Malampaya contract to expire.”

The country’s key Malampaya gas field is expected to be depleted in seven years. Operated by a unit of Royal Dutch Shell Plc, it fuels utilities producing about 40 percent of power supply for the main Luzon island, home to the capital Manila.

In July, a senior PNOC executive said the company was looking at a project that includes storage, regasification and distribution facilities and a 200-megawatt power plant, which could be upgraded to a 1,000-MW capacity.

Tokyo Gas Co Ltd said in October that it had formally expressed interest in the Philippines’ LNG project.

Meanwhile, First Gen, which owns four Malampaya gas-powered plants with a total capacity of 2,011 MW, has also disclosed plans to build its own LNG terminal. But any project would not be expected until after the country’s main import facility is completed.

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