Philippines unlikely to build new LNG terminal in near future due to excess capacity

Energy secretary of the Philippines said that it is unlikely that the Philippines will add new terminals for liquefied gas regasification this decade, as its existing facilities have been underutilized.

Sharon Garin stated that "there's enough right now" and added that a new terminal is in pre-development. The country currently uses only 60% of its regasification capability.

The government does not prioritize additional LNG infrastructure in Luzon where the two existing terminals are situated, but instead explores options to expand LNG to other regions.

Garin said that "ultimately we may put a regasification facility somewhere in Visayas, or Mindanao", referring to the central and southern island group of the country. "That would be interesting to us more than adding more on Luzon."

Philippines Increases Gas Use for Power

Due to the Philippines' geographical challenges, it is difficult to connect islands by pipeline. This has led to an interest in alternative solutions like small-scale LNG plants that have different logistic arrangements.

Garin stated that LNG terminal development is unregulated in the Philippines. This means private companies are free to proceed with projects as long as market conditions warrant investment.

Data from Kpler and the government showed that in 2023, when it became an LNG importer for the first time, it imported approximately 0.6 million tons of LNG. Since then, imports have increased and its dependence on gas has grown, according to data.

Kpler reports that the country has imported 1,58 million tonnes LNG through its two import terminals so far this year. According to one of the country's LNG purchasers, the fuel should be purchased on a nationwide basis as the current import volume is small.

Seeking long-term deals

"We must aggregate our LNG needs as a nation... at least create attention so that suppliers can say that this is a legitimate requirement." "Especially if the government is consolidating our needs as a nation," said Jay Joel L. Soriano. Vice president and head strategist and planning for First Gen Corp.

Soriano said that First Gen had only imported LNG as a one-off deal, but if it is able renew its power purchase contracts, the company would seek long-term deals.

LNGPH, which combines the power plants of South Premiere Power Corporation, Excellent Energy Resources, Inc., and South Premiere Power Corporation, is the sole LNG player in the Philippines to have a long-term agreement, sourcing LNG supply from the global energy trading company Vitol. (Reporting and editing by Sudarshan Varadhan and Emily Chow)

(source: Reuters)