BG Group, partner to put up LNG plant in Philippines? Batangas

First Gas Holdings, a joint venture company of First Generation Holdings and U.K.-based B.G. Group Plc. announced over the weekend plans to put up a liquefied natural gas (LNG) facility in Batangas, ABS-CBNNEWS.com reported Sunday.

The British power giant will undertake a P23-million feasibility study, which will establish the feasibility and optimal timing of the planned facility, while First Gas will look into the possibility of importing LNG to fuel the requirements of the plant, as well as future power generation expansion in the country.

The study would be completed by the end of this year.

B.G. Group Philippines general manager Anthony Barker said LNG has the potential to provide competitively priced gas to proposed power-generation projects such as the Sucat project that First Gas intends to bid for.

First Gas wants to take the lead in the construction of a pipeline from Batangas to Sucat. Last month, it secured an environment compliance certificate from the Department of Environment and Natural Resources for the pipeline project. It intends to work toward obtaining permits and approvals of other stakeholders before construction takes place.

?There has been considerable development in the LNG sector since we last examined LNG for the Philippines and a number of importation schemes are currently under consideration. LNG will also provide greater security of supply to the Philippines. Both the Santa Rita and San Lorenzo generators will remain as long-term contracted customers for Malampaya, an indigenous source,? Barker said.

First Gas, which has also been granted a legislative franchise to provide transmission and distribution facilities for natural gas in Luzon, has developed the 1,000-megawatt Santa Rita and the 500-megawatt San Lorenzo power plants that have provided the anchor load for the Malampaya gas field.

B.G. has built a strong LNG position in the Atlantic basin and is looking to enhance its existing portfolio by delivering competitively priced gas to high-value markets such as the Philippines.

?The study will consider positive developments in the LNG sector and how these might impact on site -- specific alternatives in Batangas,? Barker added.According to First Generation Holdings vice chairman and chief executive Peter Garrucho Jr., various LNG sellers largely from the region have indicated serious interest in selling to the Philippines but the Lopez group had second thoughts.

?The joint venture looked into LNG as an alternative way back in 1995 when the initial offers for the price of gas from Malampaya were clearly uncompetitive. But we switched back to Malampaya after some bargaining and also because we wanted to support indigenous sources. The fuel cost element is the largest component in our delivered electricity cost and at present, price from Malampaya continues to be a major issue, especially in a deregulated electricity market,? Garrucho said. (*)