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MANILA, Philippines — The Philippine National Oil Co. (PNOC) is looking to build its planned liquefied natural gas (LNG) hub by piecemeal, starting with a floating storage and regassification unit with power plant (FSRU-PP) by 2020.

The project, which can be located offshore Tabangao, Batangas near the onshore gas processing facility of the Malampaya project, should be in place by 2019 or 2020, PNOC said.

The FSRU-PP project is expected to address the country’s emergency power needs in times of natural calamities.

“The availability of an ‘army reserve,’ that is, power that is notably ship-based that could be dispatched to areas needing emergency electricity while using clean energy will undoubtedly avoid the recurrence of a similar incident in Ormoc, Leyte. Unexpected power outages as a result of natural calamities can be swiftly addressed with the availability of an FSRU-PP,” PNOC said.

Feasibility studies for the project is part of the negotiations with International Finance Corp. (IFC), a member of the World Bank Group.

PNOC said it is finalizing the agreement with IFC for the development of a comprehensive terms of reference (TOR) for the conduct of the detailed feasibility study on the use of banked gas and its assistance in forging the most appropriate business arrangement that is legally, technically and financially feasible to build the FSRU-PP Project.

In a document submitted to House Minority Leader and Quezon Rep. Danilo Suarez last week, PNOC said it plans to trade the banked gas outside of the country or to burn the banked gas and sell it in the form of electricity to optimize its potential value at the earliest time possible, prior to the Malampaya project’s depletion.

Currently, it has 97.67 petajoules of banked gas valued at around P11.9 billion which remains unsold to date.

Originally, the banked gas was designated as reserves for future use, particularly by Ilijan power plant and the five First Gen power plants with existing gas sales and purchase agreements (GSPAs), when the Malampaya gas supply runs out.

Proceeds of from the sale of the banked gas will be used to finance the first phase of the LNG hub, PNOC said.

Once the FSRU-PP is completed, the state-run firm said it will have enough income as equity to construct the second phase of the LNG terminal, “without incurring any loan that will additionally burden the country.”

Phase 2 of the project is the development of the PNOC Batangas LNG Hub which will include onshore facilities such as a five metric tons per annum (MTPA) storage units, regasification, power plant and distribution/redistribution.

This may be located at the 60-hectare property of National Development Corp. (NDC) at San Pascual, Batangas, an area near the Tabangao OGP and the Ilijan and First Gas power plants.

“The Batangas LNG Hub project is expected to provide for the requirements of the five existing Malampaya-dependent natural gas power plants in Batangas during Malampaya maintenance shutdown. On a larger scale, the hub will address the gap in energy capacity once the Malampaya gas field is depleted and the service contract expires in 2024. It will assure the sustained supply of the gas requirements of the five Malampaya-dependent power plants,” PNOC said.

PNOC was tasked by Energy Secretary Alfonso Cusi to put up an integrated LNG hub with storage, liquefaction, regassification and distribution facility, as well as a reserve initial power plant capacity of 200 MW.

Targeted to be completed in 2020, the project will help meet the requirements of gas-fired power plants supplied by Malampaya and make the country a LNG hub in Asia.

It was looking at a government-to-government (G2G) partnership for the project, using the banked gas and land as forward equity.

While it has received six proposals from China, Indonesia, Japan, Singapore, South Korea and the United Arab Emirates (UAE), the G2G search was unsuccessful due to stringent rules needed to be hurdled.

The DOE chief then decided to allow the private sector to participate in building the country’s LNG hub.

Reference:

Rivera, D. (September 13, 2017). PNOC mulls piecemeal approach in LNG hub. The Philippine Star. Retrieved from http://www.philstar.com/business/2017/09/13/1738462/pnoc-mulls-piecemeal-approach-lng-hub

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