First Gen, Prime Infra sign LNG terminal lease

FIRST GEN Corp. and Prime Infrastructure Capital, Inc., through their subsidiaries, signed a 15-year lease agreement over the former’s liquefied natural gas (LNG) storage and regasification terminal in Batangas City.

In a stock exchange disclosure on Wednesday, the Lopez-led energy company said the agreement was inked between FGEN LNG Corp. and Gas Aggregator Philippines, Inc. with the effectivity dependent “upon the satisfaction of a number of conditions precedent.”

“The lease of the FGEN LNG Terminal will form part of Prime Infra’s proposed gas aggregation strategy that will enable it to deploy a tolling business model, which will in turn allow it to leverage on its existing Malampaya project facilities and its expertise in the natural gas market,” the company said.

Prime Energy Resources Development B.V., a subsidiary of Prime Infra, holds a 45% operating stake in the Malampaya consortium. Gas Aggregator is a subsidiary of Prime Infra.

The Malampaya gas field, the country’s sole natural gas provider, is expected to be depleted by 2027.

In May, President Ferdinand R. Marcos, Jr. signed an agreement with the representatives of the Malampaya consortium renewing Service Contract 38 covering the Malampaya gas field until 2039.

Prime Energy said last week that the planned expenditure in 2024 for the drilling of at least two deepwater wells in Camago and Malampaya East fields is about $187 million.

This includes the procurement of drilling equipment, subsea equipment and umbilicals, pipelines, and securing a drilling rig.

In June, First Gen and Prime Infra inked a memorandum of understanding for the proposed lease and operation of the LNG terminal.

Last week, First Gen said it had awarded a contract to TotalEnergies Gas & Power Asia Pte. Ltd. (TEGPA) for an LNG cargo after a successful tender.

TEGPA will supply an LNG cargo of around 154,500 cubic meters for delivery in early February 2024 to First Gen’s subsidiary First Gen Singapore Pte. Ltd.

The cargo will be delivered by an LNG carrier, which will be unloaded into the storage tanks of the BW Batangas floating storage regasification unit (FSRU).

The FSRU is berthed at the First Gen Clean Energy Complex in Batangas City. The LNG will be used by FGEN’s existing gas-fired power plants in the complex.

FGEN LNG has approximately 2,000 megawatts (MW) in operating gas assets composed of four gas-fired power plants, which are the 1,000 MW Sta. Rita power plant, the 500-MW San Lorenzo power plant, the 414-MW San Gabriel power plant, and the 97-MW Avion power plant.

At the local bourse on Wednesday, shares of First Gen went down by P0.26 or 1.51% to close at P17 apiece. — Sheldeen Joy Talavera