First Gas plans $700-M integrated LNG project

HOUSTON, Texas – The Lopez-owned First Gas Holdings Corp. (FGHC), together with its joint venture partner British Gas (BG), unveiled plans to pursue their expansion project in the Philippines which calls for the establishment of a regasification facility for liquified natural gas (LNG) and an adjoining 500-megawatt (MW) power plant at a suitable location in the Batangas Bay area.

Company officials placed the cost of the project at about $700 million, with $200 million to be spent for the LNG regasification plant and about $500 million for building a new 500-MW power plant. The project is to be funded through a combination of debt, bond offers and internally-generated funds.

Anthony Barker, BG Philippines country manager, told a group of visiting Filipino journalists here that the joint venture group (FGHC and BG) had already completed the feasibility study last year and is now looking for an ideal site for the regasification plant and the power plant to serve as its ready market. The main focus of the study is the regasification facilities.

He said the LNG project wil initially supplement the Malampaya natural gas supply for the company’s 1,000-MW Sta. Rita and 500-MW San Lorenzo power plant in Batangas. It will eventually end up being the main supplier when the contracts of First Gas with Shell expire after 20 years and the Malampaya reserves start to run out.

Barker also said they have already agreed to form a new joint venture entity – First Natural Gas Power Co. (First NPC) – to undertake a 500-MW new power plant to be christened San Gabriel.

However, he said the joint venture is still awaiting further positive developments in the power industry, such as government’s privatization of Natural Power Corp.’s assets, particularly those that can be converted into gas-fired plants like the Sucat and Limay plants. This will serve as an option for an anchor load needed to spur the LNG project.

Barker admitted that other groups are also interested in bringing LNG into the Philippins which he said is good for the country. However, he pointed out that "we feel we are better positioned to do this." He cited BG’s "first mover advantage" in the US market which he said is also the joint venture’s edge in the Philippines, having already gained the experience and expertise in the use of natural gas for power generation.

Barker said that assuming that the Philippines can still attract substantial investments in the power industry, with rules, hopefully, not being changed in the middle of the game, the LNG facility is expected to be on stream by 2012.