First Gen Corp. on Monday confirmed discussions with Prime Infrastructure Capital Inc. of businessman Enrique Razon Jr. to develop a gas aggregation framework with the Lopez firm’s liquefied natural gas terminal in Batangas as a main component.
First Gen said in a disclosure to the Philippine Stock Exchange the gas aggregation framework was meant to “make it possible to blend currently declining volumes of indigenous Malampaya gas with imported LNG.”
It said the framework would provide least-cost solution for consumers, enhanced energy security and competitive market for power generation.
It would also complement ongoing commercial development of “new indigenous natural gas fields.”
Key to the gas aggregator framework would be FGEN LNG, a wholly-owned subsidiary of First Gen, which signed a memorandum of agreement with Prime Infra for the use of its LNG terminal.
“The Gas Aggregator Framework is intended to make it possible to blend currently declining volumes of indigenous Malampaya gas with imported LNG to ensure a least-cost solution for consumers, enhance energy security, and provide a competitive power generation market, while exploration activities leading to the commercial development of new indigenous natural gas fields are undertaken,” First Gen said.
“All of these activities are in response to the national government’s urgent call for significant investments to ensure national competitiveness,” the company said.
First Gen is developing an integrated LNG and regasification terminal in its energy complex in Batangas City.
It said Prime Infra’s lease of its LNG terminal is part of the gas aggregation proposal, which would leverage the Malampaya gas facilities being operated by a consortium led by Prime Infra subsidiary Prime Energy.
The proposed framework would also tap the Malampaya consortium’s expertise in the natural gas market and would lead to reliable and lowest cost supply of clean gas to the country’s power plants.
First Gen earlier said its agreement with Prime Infra for the use of the LNG terminal in Batangas City “embodies a mutual recognition” of the parties “of the need to ensure a steady and secure source of natural gas providing low-cost and sustainable baseload power through gas aggregation.”
Prime Energy holds a 45-percent stake in the Malampaya consortium.
First Gen owns four gas-fired power plants with a combined capacity of 2,017 megawatts and which have been getting supply from the Malampaya gas project for many years under a gas sale purchase agreement.
The gas aggregate proposal was presented to President Ferdinand Marcos Jr. at the Malacanan Palace recently where he expressed enthusiasm over it.
“It seems that this gas aggregator idea is the key,” Mr. Marcos said after the proposal was presented to him by officials of the Malampaya consortium led by Razon.
“We have work to do,” the president said.
The gas aggregator framework “establishes a resilient and efficient natural gas supply chain,” Prime Infra president and chief executive Guillaume Lucci said in a statement.
Lucci said the proposal “would ensure a stable and sustainable baseload power supply.”