San Miguel keen on joining First Gen’s LNG project
Conglomerate San Miguel Corp. expressed interest to team up with First Gen Corp. in building a $1-billion liquefied natural gas terminal with an annual capacity of 5 metric tons in Batangas province.
“We can build or partner with First Gen…We have quite a lot of options. SMC and First Gen are quite close,” SMC president Ramon Ang said.
Ang said SMC could expand the capacity of the 1,200-megawatt Ilijan natural gas power plant by another 1,800 MW later on, once LNG became available in the country.
“We have not talked to them [First Gen]. There is no problem. We can be joint [partners in the LNG project] or we can buy from them,” Ang said.
“For Ilijan, we will retain [it] as gas [power plant] and we may even expand that. Floating terminal or regas needs at least 3,000 MW to be economical,” Ang said.
First Gen expects to start the construction of its LNG terminal next year which it said would be the most advanced LNG project in the country.
First Gen is building its own terminal to secure LNG supply for its own 1,000-MW Sta. Rita, 500-MW San Lorenzo, 414-MW San Gabriel and 97-MW Avion natural gas plants in Batangas.
First Gen is negotiating with local and foreign firms as possible partners for the LNG facility. It expects to finalize the joint venture partnership this year.
Supply from the Malampaya natural gas project is projected to start declining by 2022.
Meanwhile, Ang said SMC would be the rightful owner of the Ilijan plant once the operation and management contract of Korea Electric Power Corp. expired by 2022.
Kepco operates the Ilijan power plant under a build-operate-transfer agreement with the government while SMC, through unit South Premiere Power Corp. trades the output of the plant under its independent power producer agreement with the government.
SMC is engaged in a legal tussle with the state-run Power Sector Assets and Liabilities Management Corp. over the alleged unsettled claims on the Ilijan plant.
The Court of Appeals affirmed SMC Global Power Holdings Corp.’s writ of preliminary injunction against PSALM on the Ilijan power plant in January.
PSALM sought the termination of SMC as the IPP administrator of the Ilijan natural gas power plant and called on the performance bond in the form of a stand-by letter of credit of South Premiere with ANZ Bank in the amount of $50 million, prompting SMC to file an injunction with the courts.
Ang said SMC religiously paid PSALM its fees under the IPPA agreement.