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Philippines LNG projects pass significance test

The island nation's government awards certificates to two more planned import facilities

Philippines power firm First Gen had its application for the proposed Batangas LNG terminal, to be considered an energy project of national significance (EPNS), approved by the country's energy ministry in early August, becoming the second in a matter of weeks to announce the milestone.

At the end of July, Australia's Energy World Corporation (EWC) said that its Pagbilao project had also been certified as an EPNS earlier in the month.

The logic for developing the projects, which are just two of a slew of projects to import LNG into the Philippines, is two-fold. Firstly, the country's only major source of domestic gas production—Shell's Malampaya field, which supplies 3.2GW of existing gas-fired generation and other demand—is set to begin declining early next decade. Also, the country wants to reduce its dependence on polluting coal-fired generation, a goal reiterated by President Rodrigo Duterte in his July state of the union address, in part by increasing gas-fired capacity.

First Gen's Batangas project, with a capacity of up to 5mn t/yr, falls into the former category. The firm already has 2GW of gas-fired capacity that will need an alternative supply once Malampaya volumes fall. EWC's 1.5mn t/yr import terminal, on the other hand, is linked to a new 650MW combined-cycle gas turbine (CCGT) power plant.

First Gen held a ground-breaking ceremony for Batangas LNG in May with partner Tokyo Gas of Japan, which came on board in a December 2018 joint development agreement (FDA), and foresees Tokyo Gas taking a 20pc equity stake in the project. The ceremony reflected that pre-development work had made the site construction ready, although no final investment decision (FID) has yet been taken.

Only Bangladesh in the last year has made an importing debut

A third Philippines LNG import facility has also made significant progress this year. The 2.2mn t/yr Tanglawan LNG project received its Notice to Proceed in January, while state oil firm Pnoc joined the existing backers, privately-held Philippines oil firm Phoenix Petroleum and Cnooc, one of China's 'big three', in signing a March memorandum of understanding (MoU) on developing the terminal.

Tanglawan has a projected start date of the end of 2023 and has up to 2GW of new gas-fired capacity attached to the overall plan.

Pnoc's entry into the Tanglawan consortium has not, though, precluded it from continuing involvement in other potential import projects. In April, Dubai-based LNG infrastructure developer Lloyds Energy had its unsolicited offer to Pnoc to build an LNG hub with associated generation assets determined complete under government regulation. Lloyds Energy is aiming to develop a 1200MW CCGT with Japan's Mitsubishi, and says Pnoc is interested in taking a minority stake.

Pnoc also signed an MoU with the subsidiary of another of China's 'big three', CNPC, on collaboration in areas including LNG import. Another Chinese firm, independent LNG import company Jovo Group, signed an MoU with the Philippines on the building and operation of an LNG receiving terminal in the presence of President Duterte in May.

As many as five other potential Philippines import projects have received press coverage in recent months, although none seem to have progressed far.

Vietnam

Appetite to bring other south and southeast Asia countries into the LNG importer club is also strong. The picture in Vietnam is similar to the Philippines, with a raft of potential projects aimed at plugging a domestic supply gap and facilitating more gas-fired generation at the expense of coal.

The Thi Vai LNG import facility being developed by state-owned Petro Vietnam (PV) is the most advanced. In July, PV signed contracts for the construction of the terminal with South Korea's Samsung and with state-owned electricity utility PV Power for gas supply to its Nhon Trach 3 and 4 power plants. Thi Vai LNG will have a capacity of 1mn t/yr in a first phase to be completed by 2022 and 3mn t/yr in a second phase targeted for 2023. The schedule will line up with the start of the 750MW Nhon Trach 3 CCGT and the similarly sized Nhon Trach 4 the following year.

But Vietnam has at least seven other potential projects that have made it to the public domain. A range of backers include east Asian, European and US utilities through international oil companies and privately-held southeast Asian firms to state-owned Vietnamese concerns.

Cambodia

Cambodia is also moving forward with LNG imports. Singapore engineering consultancy H Sterling is working with Cambodia Natural Gas Company to develop a 1.5mn t/yr import terminal to supply a 1200MW CCGT at the port of Sihanoukville.

And Finnish engineering firm Wartsila signed a contract with a Chinese developer working on behalf of the state-owned Cambodian power utility to deliver turbines with a capacity of 200MW for a site just outside capital Phnom Penh. The plant will run on heavy fuel oil when it begins operations in 2020, but "will switch to LNG when the local infrastructure is available", says Wartsila. These projects tie in with a July prediction by consultancy IHS Markit that Cambodia will revise its 2016 power development plan to include a target of 1500MW of gas-fired capacity, rather than the provisional 300MW.

South Asia

In south Asia, the Asian Development Bank in June approved a funding application from the Sri Lankan government to support a feasibility study by the state-owned utility CEB into the best options for an LNG import terminal, land-based or floating, and the optimal location for gas-fired power plants. The project also sees potential for small-scale LNG exports to the Maldives linked to the larger Sri Lanka facility, suggesting two more south Asian countries could join the club in the medium-term.

Amid the optimism for new LNG markets in the Asia-Pacific region, it should be noted that only Bangladesh in the last year has made an importing debut. That said, the country saw a second floating terminal commissioned off Moheshkhali Island in the Bay of Bengal in April, just eight months after US developer Excelerate brought a first project to fruition in the same area.

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