First Gen Corp. signed on Wednesday a joint development agreement (JDA) with Tokyo Gas Co., Ltd. to build a liquefied natural gas (LNG) terminal within the Lopez-led company’s power generation complex in Batangas City.
“First Gen is excited to partner with Tokyo Gas, a world class natural gas and LNG company with vast experience in the development, financing, construction and operations of LNG storage and regasification facilities,” First Gen President Giles B. Puno said in a disclosure to the stock exchange on the same day of the signing.
The listed company, which runs most of the country’s gas-fired power plants, said JDA is a preliminary agreement between the parties at First Gen’s Batangas Clean Energy Complex.
For the Lopezes, the project will be through First Gen unit FGEN LNG Corp. The agreement comes after recent pronouncements from the government describing LNG as vital to ensure the country’s energy security once the Malampaya gas field, which fuels the company’s plants, is depleted.
Tokyo Gas will take a 20% participating interest in the LNG project and provide support in development work to achieve a final investment decision.
Upon reaching that decision under the JDA, the parties will enter into a definitive agreement to proceed with the construction of the project, First Gen said.
First Gen quoted Tokyo Gas President Takashi Uchida as saying that his company, “is pleased and delighted to have signed the agreement with First Gen which is the leading company utilizing environmentally-friendly natural gas in the Philippines, and which has been contributing to realize a low carbon society.”
“First Gen and Tokyo Gas share the common belief that the country needs clean natural gas to produce power which is not only cost-competitive but, given its flexible operations, is the perfect complement to a growing renewable energy industry,” Mr. Puno said.
“Finally, we both share the vision of the Department of Energy in the implementation of LNG projects in the Philippines. First Gen and Tokyo Gas intend to cooperate with all relevant stakeholders who share the same vision to participate in making LNG viable for the Philippines,” he added.
First Gen has around 2,000 MW in operating gas-powered plants, namely: the 1,000-megawatt (MW) Santa Rita power plant, the 500-MW San Lorenzo power plant, the 414-MW San Gabriel power plant and the 97-MW Avion power plant.
Tokyo-based Tokyo Gas is a leading LNG player with 130 years of experience and more than 50 years of experience in the LNG business. It is one of the largest buyers of LNG in the world with an annual volume of 14 million tons per annum (MTPA). Tokyo Gas has over 63,000 kilometers of gas pipelines serving more than 11 million customers.
“Tokyo Gas would like to be instrumental in introducing LNG to the Philippines by pursuing the FGEN LNG Project and developing a safe and stable energy infrastructure system, taking advantage of its LNG expertise accumulated for half a century,” said Mr. Uchida.
On Wednesday, shares in First Gen closed 42 centavos or 2.35% higher at P18.30 each.