First Gen Seeks DOE’s Nod for LNG Project Extension

Source: 6/16/2022, Location: Asia

Lopez-led First Gen Corporation is seeking the approval of the Department of the Energy (DOE) on its bid for a six-month extension of the license for its interim offshore liquefied natural gas (LNG) import facility given delays that it has been encountering in the project’s implementation.

In a disclosure to the Philippine Stock Exchange (PSE), First Gen indicated that its project corporate vehicle FGEN LNG Corporation formally asked the DOE “to extend the validity of its permit to construct, expand, rehabilitate and modify (“PCERM”) for its interim offshore LNG terminal from Sept. 23, 2022 to March 23, 2023.”

The company argued that its plea for project permit extension is in accordance with the provisions of the Philippine Downstream Natural Gas Regulations (PDNGR) which was previously issued by the DOE to guide investments in the emerging LNG industry of the country.

“The request is due to projected delay in the completion of the project caused by events and circumstances not within the reasonable control of FGEN LNG,” the Lopez firm emphasized.

First Gen similarly apprised the energy department that Norwegian firm BW FSRU IV Pte Ltd., which is the provider of its floating storage regasification unit (FSRU), already “agreed to move delivery of FSRU BW Paris” from first quarter of 2023 to the end of second quarter or early part of third quarter next year.

The Lopez firm reiterated that “the project will play a critical role in ensuring the energy security of the Luzon grid and the Philippines, particularly as the indigenous Malampaya natural gas resource is expected to decline in the next few years.”

The interim offshore LNG import terminal of First Gen is one of the only two to three projects that had advanced to full-fledged implementation; while the rest of the project proponents opted to backpedal on their investment plans.

The LNG facility of First Gen will be beneficial not just to its own gas-fed power plants in Batangas; but this could also help fuel greenfield gas-fired generating facilities that may eventually be developed in the country.

The shift to LNG of the gas plants is highly critical given the fast-declining state of indigenous gas production at the Malampaya field, as well as the expiration of the project’s service contract in February 2024.

Gas-fed power assets are heavily relied upon not just for baseload power needs, but more importantly for the mid-merit capacity requirements of the power system; and the flexibility of such technology also serves as a perfect coupling to the targeted massive renewable energy (RE) installations in the country.

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