Empowering Asian energy industry with Philippines’ first integrated LNG facility

Three players – Meralco PowerGen Corporation (MGen), Aboitiz Power Corporation (AP), and San Miguel Global Power Holdings Corp. (SMGP) – are setting in motion the Philippines’ first integrated liquefied natural gas (LNG) facility in Batangas to bolster energy security and steer the Asian country towards a more sustainable future.

The trio is launching this LNG facility in a move that is seen as a landmark development for the Philippines’ energy sector in line with the Marcos administration’s push for more natural gas in the country’s energy mix. The project is expected to make competitively priced and affordable power accessible to a broader base of Filipino consumers.

Thanks to a deal worth $3.3 billion, MGen and AP will jointly invest in two of SMGP’s gas-fired power plants: the 1,278 MW Ilijan power plant and a new 1,320 MW combined cycle power facility which is expected to start operations by the end of 2024. Together with SMGP, the duo will invest in almost 100% of the LNG import and regasification terminal owned by Linseed Field Corporation.

Manuel V. Pangilinan, MGen’s Chairman, commented: “This is a pathbreaking venture. Apart from transforming the energy landscape of the Philippines, this symbolizes a milestone alliance among major players in the energy industry towards a more sustainable future. We are thrilled to have such reliable partners as we lay the foundation for a brighter, greener future.”

Aside from this, the three companies will acquire the LNG import and regasification terminal of Linseed Field Corporation, which will be used to receive, store, and process LNG fuel for the two power plants, thus, fully integrating the local energy sector into the global natural gas supply chain.

“LNG offers significant environmental advantages over traditional fossil fuels contributing to reduced greenhouse gas emissions, combating climate change, improving air quality, and enhancing public health, making it the ideal transition fuel to a renewable energy future,” outlined AP.

Once fully operational, the partnership between MGen, AP, and SMGP is anticipated to substantially boost the country’s power supply with over 2,500 MW or 2.5 GW of generation capacity, backed by advanced LNG storage and regasification capabilities, enabling the country to meet its energy requirements while supporting its environmental objectives by slashing emissions.

Sabin M. Aboitiz, AP’s Chairman, commented: “Both LNG and renewables are needed to achieve a balanced energy mix and well-planned energy transition. Above all, this is a big win for the Philippines and the people. Economic development is impossible without energy security, and this investment is a definitive step forward in that direction.”

As the Philippines’ goal is to curb greenhouse gas emissions by 70% by 2030, the deal between these three players is in line with the push towards diversifying energy sources through the increased use of natural gas, as the Department of Energy’s ‘Philippine Energy Plan’ has pinpointed LNG as crucial for the country’s energy sustainability and security, aiming to boost natural gas’ share in the power generation mix to 26% by 2040.

Ramon S. Ang, SMGP’s Chairman and President, noted: “For the first time, three leading power companies are working together to secure our country’s energy needs while transitioning towards cleaner power sources. This represents a major leap forward for our energy future, ensuring not just reliability but also cost-efficient power for many Filipinos.”

When April 2023 rolled in, the Philippines received its first-ever LNG cargo after commissioning an LNG import terminal developed by Atlantic Gulf & Pacific (AG&P). In preparation for launching the first Philippines LNG import terminal, AG&P completed the conversion of the ISH, a 137,500 cbm LNG carrier, into an FSU in October 2022.

The FSU is part of the combined offshore-onshore import terminal with an initial LNG capacity of 5 million tons per annum (mtpa). The Philippines is working on the buildout of floating LNG terminals. This includes the floating storage and regasification unit (FSRU) BW Batangas deployed at First Gen Corporation’s LNG import terminal. 

Aboitiz Power is pursuing the decarbonization of its business. To this end, an agreement was inked with Japan’s JERA to begin a joint study on ammonia co-firing. The Japanese firm also signed an agreement with the Association for Overseas Technical Cooperation and Sustainable Partnerships (AOTS) for system design and other support related to the adoption of LNG in the Philippines.