Prime Infrastructure, First Gen ink MOU on Batangas LNG terminal lease

MANILA, Philippines — Prime Infrastructure Capital Inc. of tycoon Enrique Razon has signed a memorandum of understanding with FGEN LNG Corp. of the Lopez Group for the lease and operation of the latter’s liquefied natural gas storage and regasification terminal in Batangas City.

The lease of the LNG terminal will form part of Prime Infra’s proposed gas aggregation strategy that is focused on leveraging its existing Malampaya project facilities to ensure a reliable and lowest cost supply of clean gas at stable fuel costs to the country’s natural gas power plants.

Prime Infra subsidiary Prime Energy is the main operator of the Malampaya deep water gas-to-power project.

The renewal of the Malampaya Service Contract No. 38 was recently approved by President Marcos, allowing the continued production of the gas field and ensuring that the remaining gas reserves are further explored and utilized until February 2039.

“The partnership embodies a mutual recognition by both FGEN LNG and Prime Infra of the need to ensure a steady and secure source of natural gas providing low-cost and sustainable baseload power through gas aggregation,” First Gen Corp. said in a stock exchange filing, noting that no definitive agreements have been signed by the parties.

FGEN LNG, a wholly owned subsidiary of First Gen, is developing the LNG terminal within the First Gen Clean Energy Complex in Batangas City.

The construction of the LNG terminal has reached practical completion, with the commissioning of the floating storage and regasification unit vessel expected soon.

The terminal has been officially certified by the Department of Energy (DOE) as an energy project of national significance.

“The aggregator enables the formation of a competitive gas market underpinned by the growth of the natural gas power generation capacity in line with DOE’s power development plan, the availability of LNG as a new fuel source, and the exploration for and commercial development of new indigenous natural gas fields, all in response to the President’s urgent call for significant undertakings to ensure national competitiveness,” First Gen said.

Natural gas is seen as a complementary transition fuel to support the DOE’s 2020-2040 Philippine Energy Plan to ensure energy security, while enhancing the renewable energy capacity of the country.

First Gen executive vice president and chief commercial officer Jonathan Russell earlier said the company planned to commence this month the tender for the initial shipment of the company’s LNG supply requirement.

Russell said the company hopes to complete the tender and make the award for the approximately 160,000 cubic meters of LNG cargo by July.

“We’re looking for delivery in August to September,” he said.

Russell said the initial cargo would be used by First Gen for the wet commissioning of its LNG terminal project in Batangas.

First Gen president and COO Francis Giles Puno said the company continues to build on the infrastructure that will allow the country to import enough LNG and assure the continued operations of the natural gas plants in the country.

“On the LNG infrastructure, First Gen has achieved practical completion on all its construction milestones,” Puno said.

“We expect the arrival of the BW Batangas floating storage regasification vessel next month to enable the facilities to begin its commissioning activities,” he said.