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ps88 First Gen secures LNG supply from Shell Eastern
First Gen Corp. of the Lopez Group received a new delivery of liquefied natural gas (LNG) from Shell Eastern in October, which could be its last for the year, an official said Tuesday.
Vincent Villegas, First Gen senior vice president and chief revenue officer, revealed this to reporters on the sidelines of the Philippine Natural Gas Investment Summit in Pasay.
Article continues after this advertisement“We had a delivery recently, I think it’s [from] Shell,” he said.
FEATURED STORIES BUSINESS Buying gold can be this affordable BUSINESS PH remains heavily reliant on imported vehicles BUSINESS How hybrid rice can feed the PhilippinesThe arrival of the fresh LNG shipment came just a month after Shell Eastern had bagged the contract in September of this year from First Gen Singapore Pte. Ltd.
The deal included about 154,500 cubic meters of LNG shipment.
Article continues after this advertisementREAD: First Gen profit down 10% on weaker geothermal biz
Article continues after this advertisementThe group earlier said the cargo would be shipped to the Subic Bay Freeport in Zambales, where it would be loaded into the BW Batangas, a floating storage regasification unit in the country.
Article continues after this advertisementVillegas said the company did not expect to welcome additional LNG cargos this 2024.
“If you have a contract, say five cargos in a year, the seller will say ‘tell me the delivery dates’ and we have to consume it; by the time the next cargo comes, we should empty the tank,” he said, when asked about how long the new LNG supply would last.
Article continues after this advertisementFirst Gen did not disclose if its contract with Shell Eastern was its fifth cargo, as its deal with Japanese firm TG Global Trading Co. had faced delays due to vessel repairs.
On its planned spending for LNG inventory next year, Villegas said it would depend on market prices but the funding may reach “tenths of millions of dollars.”
First Gen chair and CEO Federico Lopez earlier said that the group would explore bigger and long-term supply contracts with foreign players as the Philippines would “get better terms and prices if you do it that way.”
The group welcomed its first LNG cargo delivery in Subic last August 2023. Subsequent deliveries were received at its Batangas complex in December 2023, and February and May of this year.
First Gen has a network of four gas-fired power plants with a combined installed capacity of 2,017 megawatts, with facilities located in Batangas province: San Lorenzo, San Gabriel, Santa Rita and Avion gas plants.
With long-term supply contracts, Puno said the country may see a “more stable” LNG pricing.
Transition fuel
Energy Secretary Raphael Lotilla earlier reiterated the role of LNG as transition fuel as the Philippines moves to embrace clean energy.
However, think tank BMI, a unit of Fitch Group, said in its previous report that there was “no urgency for power producers” to secure long-term deals on LNG supply as operators of the Malampaya gas field spend millions of dollars to extend its production life.
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Just in August, the Service Contract 38 Consortium, led by Prime Energy Resources Development BV, tapped Dutch firm Allseas Nederland to link the two new wells to the Malampaya Shallow Water Platform. In March, American offshore drilling company Noble was contracted to drill two deepwater development wells. The wells will be drilled next year, with a new supply of gas expected by 2026.
BMI said that while the LNG can be a “viable transition fuel” for the sectorps88, the current administration may rethink this if its prices “become too costly.”
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