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Government approval puts

Philippine LNG project back on track

PROJECTS & THE Philippines is on track to begin importing
COMPANIES liquefied natural gas (LNG) before the end of
2022, following the government’s recent green
light for work to begin on a floating storage and
regasification unit (FSRU) based project.
Philippine energy developer First Gen said
on September 24 that the Department of Energy
(DoE) had approved subsidiary FGEN LNG’s
plans to build interim import capacity in Batan-
gas Province.
The energy company said FGEN LNG had
received a permit to construct, expand, rehabil-
itate and modify (PCERM) existing facilities at
the First Gen Clean Energy Complex in Batan-
gas City.
FGEN LNG originally applied for the permit
on March 4, with a view to beginning building
in May. However, the government began rolling
our social quarantine measures on March 15 in
response to the coronavirus (COVID-19) pan-
demic, delaying project approvals.
First Gen’s executive vice president and ongoing non-binding process has been com-
chief commercial officer, Jonathan Russell, pleted. BW Gas, GasLog LNG Services and
thanked the government for issuing the per- Hoegh LNG Asia have expressed interest in
mit despite the “difficult circumstances” cre- providing the vessel.
ated by the pandemic. The Philippines is counting on LNG to offset
The project, which represents the initial a decline in domestic gas production, with the
phase of the terminal’s construction, involves DoE projecting that the country’s largest gas
turning an existing liquid fuel jetty into a multi- field, Malampaya, will run dry by 2027.
purpose jetty as well as building an onshore gas
receiving facility. The jetty’s conversion will allow Strategic divestment
it to receive large and small-scale LNG vessels in In related news, Royal Dutch Shell announced
addition to oil product tankers. on September 24 that it was looking to sell its
The company wants to start construction by 45% stake in Malampaya, which supplies feed-
the fourth quarter and expects to be able to begin stock for four power plants on the country’s main
importing LNG by the third quarter of 2022. island of Luzon. These TPPs deliver around a
FGEN LNG intends to issue a binding fifth of the country’s power requirements.
invitation to tender for the FSRU once an “As part of an ongoing portfolio ration-
alisation to simplify and increase the resil-
ience of its business, Shell is exploring its
options with a view to divesting its interest [in
Malampaya],” Reuters quoted an unnamed
spokeswoman as saying. “Shell would ensure
a smooth transition of the asset to a credible
buyer who would be well placed to optimise
the value from Malampaya.”
The divestment is part of Shell’s ongoing
efforts to slash its oil and gas expenditure as it
focuses more on renewable energy and power
markets, Reuters quoted unnamed sources as
saying. Shell announced on September 30 that it
intended to deliver $2.0-2.5bn in annual savings
by 2022, which is in addition to the $3-4bn cost
cuts announced earlier this year.
However, Philippine Energy Secretary
Alfonso Cusi said: “I’m not aware of who they
[Shell] are negotiating with. What I know is they
are looking for a buyer.™

P8 www. NEWSBASE .com Week 39 01•October•2020