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LNG hub to face competition from Singapore, China

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REUTERS

THE PHILIPPINES is well-placed to become a regional hub for liquefied natural gas (LNG) though it will be competing with Singapore and some parts of China, an Asian Development Bank (ADB) official said.

“Many countries want to become a hub [for LNG]. I think the Philippines has an advantage [because] you already have gas utilization, [you] use gas. Gas consumption is important here. To become a hub you need to have an internal consumption so that there is anchor demand and you have geographic location that can reach from here to other places,” said Yongping Zhai, the ADB’s energy sector group chief, in an interview on Tuesday.

“I think the Philippines is well-placed but so other countries as well, like Singapore, and some cities in China,” he said.

He said he expects “healthy competition” in providing the better facility to become an LNG hub.

“I think market forces work in favor of the Philippines if we do all the infrastructure,” he said.

Mr. Zhai is part of the ADB team that is advising the Philippine National Oil Co. (PNOC) on the viability of putting up an LNG import terminal in the country. PNOC, the commercial arm of the Department of Energy (DoE), has been receiving partnership offers from foreign and local companies to build the terminal.

PNOC has said that it has a property to build the terminal as well as “banked gas” that it could offer as equity in the project.

In June 2017, Energy Secretary Alfonso G. Cusi said his department was looking at the construction of LNG receiving and distribution infrastructure, which he said could make the country an LNG hub for Southeast Asia.

He said the facility, which is targeted to be completed by 2020, would cost around P100 billion. The timeline should give the country enough lead time and safeguard supply ahead of the anticipated depletion of the Malampaya gas find starting in 2024.

The facility will have a power plant component with an initial 200-megawatt (MW) capacity, he said, adding that its output is expected to serve the country’s economic zones.

Separately on Thursday, Senator Sherwin T. Gatchalian, who chairs the Senate’s energy committee, said he was looking at crafting a comprehensive legislation to develop the local natural gas industry ahead of Malampaya’s depletion.

To date, natural gas from the Malampaya gas field off the coast of Palawan fuels five gas-fired power plants in Batangas province with a combined capacity of 3,211 MW.

Asked about the scope and status of ADB’s advisory services to PNOC, Mr. Zhai said: “We are in the stage of assessing the offers from companies and we gather information from inside the country. What would be the demand? Also, [we] assess the international market. What will [be] the price of LNG, whether we buy on long-term contracts, short-term contracts, spot — what will be the cost implications?” he said.

“We need to gather all this information [and] provide advice to government so that a decision can be made [on] how to move forward with the LNG project,” he added.

He said PNOC has some lead time to complete the project ahead of the expected depletion of the Malampaya field.

“In fact, preparations for LNG imports have started,” he said.

Mr. Zhai said that when he joined ADB in 2000, his assignment was to look into the viability of the Philippines in importing LNG. The bank provided grant money for that purpose, he added.

“I think it’s time. We’re much closer to a time that LNG becomes [a] real energy import for the Philippines. So I’m very optimistic because I’ve seen the process — 18 years of preparing, thinking and comparing different options. And today, considering the world energy market, is the best time,” he said. — Victor V. Saulon