First Gen in Batangas LNG deal with Tokyo Gas

First Gen, controlled by the Lopez family, has inked a joint cooperation deal with Japan’s Tokyo Gas for the next phase of the Batangas LNG import terminal in the Philippines.

This deal follows the joint development agreement which initially governed the duo’s relationship since December 5, 2018.

Under the new preliminary deal, the two firms will jointly pursue the design, development, construction and operations of the interim offshore LNG terminal.

The project located at First Gen’s existing Batangas energy complex consists of the modification of the existing jetty for multi-use and adding gas receiving facilities.

To remind, First Gen recently announced it secured an approval from the Philippines’ Department of Energy to modify the jetty and build the receiving facilities.

Once completed, the project will allow the the firm to bring in a floating storage and regasification unit (FSRU) on an interim basis and introduce LNG to the Philippines in the third quarter of 2022.

Under the new deal, Tokyo Gas will have a 20% participating interest in the project and provide support in development, construction, operations and maintenance work to achieve a final investment decision.

Upon reaching FID, the parties will enter into a definitive agreement.

McConnell Dowell wins contract

In a separate statement on Wednesday, First Gen said it selected McConnell Dowell Philippines for the engineering, procurement and construction of its interim offshore LNG terminal.

McConnell Dowell is an Australian-based unit of Aveng, which operates in the engineering and construction sector across Australia, New Zealand, and South East Asia.

The contract is worth about $300 million and the construction could begin by the end of this year.

In parallel, First Gen’s LNG unit is preparing to issue a binding invitation to tender for a FSRU upon completion of its ongoing non-binding process.

Three experienced FSRU providers, BW Gas, GasLog, and Hoegh have expressed interest in providing the vessel.

First Gen believes the LNG development will play a “critical role” in ensuring the energy security of the Luzon Grid and the Philippines, particularly as the indigenous Malampaya gas resource is expected to be less reliable in producing and providing sufficient fuel supply for the country’s existing gas-fired power plants, and even less so for additional gas-fired power plants.

The entry of LNG will encourage new power plant developments, as well as industrial and transport industries, to consider it as a replacement to more costly and polluting fuels, the firm said.

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