Philippine firms launch first integrated LNG facility

Three of Philippines' top energy firms have come together to launch the country's first integrated LNG facility in Batangas city, according to private-sector utility Aboitiz Power on 4 March.

The utility owns several power plants across the country.

The two other firms are SMC Global Power Holdings, subsidiary of conglomerate San Miguel (SMC), and power generator Meralco. The project is valued at $3.3bn, and is the country's largest such project to date.

As part of the deal, all three firms will acquire an LNG import and regasification terminal located in Batangas and owned by domestic firm Linseed Field, to store and process the super-chilled fuel.

The LNG will in turn be destined to feed two gas-fired power plants owned by SMC — the 1.2GW Ilijan power plant and a new 1.3GW combined cycle power facility which is likely to start operations by the end of 2024. Aboitiz Power and Meralco will also jointly invest in the two plants.

This latest deal aligns directly with the Philippine Department of Energy's (DoE's) target for natural gas to make up 26pc in the country's power generation mix by 2040. Natural gas comprised only 4.2pc of the Philippine energy mix in 2022, according to DoE data.

"The collaboration among the three power companies represents a shared commitment to innovation, reliability, and environmental stewardship in the energy sector," the three firms said in a press statement.

This is an unprecedented move in an industry that has traditionally been marked by competition instead of cooperation, traders said.

But some obstacles still remain. Philippine utility First Gen announced just last week that it could consider not awarding a tender that it issued on 19 February, citing a potential lack of commitment from Meralco to take and pay for part of the cargo.

The firm was seeking a cargo for delivery to Batangas, with the gas intended for the 1GW Santa Rita, 500MW San Lorenzo, 97MW Avion and 420MW San Gabriel power plants. The cargo was sought to ensure full LNG stocks ahead of the peak summer demand months, First Gen said.

By Rou Urn Lee