LNG infrastructure buildup still slow in Philippines, says Fitch
MANILA, Philippines — The country’s liquefied natural gas (LNG) infrastructure is not expected to grow at an unprecedented rate even as investments in LNG import terminals are moving ahead, according to Fitch Solutions.
In a report, Fitch Solutions Country Risk and Industry Research said six LNG import terminals with a combined capacity of 21.7 million tons per annum (mtpa) have been approved by the government to support the anticipated surge in LNG imports for the power sector.
Of the six projects, three are scheduled for completion this year.
Fitch Solutions said AG&P’s three-mtpa floating regasification unit at Batangas Bay is expected to commence operations within the first quarter, while First Gen LNG’s 5.3-mtpa offshore floating storage and regasification unit terminal in Batangas is scheduled to be completed within the same period as well.
Energy World Corp.’s onshore three-mtpa LNG terminal in Quezon is also progressing and is expected to be completed within the year, according to Fitch Solutions.
Meanwhile, Vires Energy Corp. is in the advanced stage of project development for its 3-mtpa LNG storage and regasification terminal integrated with a 450-megawatt gas-fired power plant.
Fitch Solutions said the terminal is expected to commence operations in 2026.
A three-mtpa floating storage and regasification terminal of Shell Energy Philippines is targeted to commence construction by the first quarter of next year, while US-based Excelerate Energy has yet to receive approval from the Department of Energy to construct its proposed LNG import facility in Batangas Bay.
Fitch Solutions said that while investments in LNG import terminals are moving ahead, it does not expect the country’s LNG infrastructure to grow at an unprecedented rate.
“Potential growth in gas consumption means that there is strong incentive for expansion of import capacity, but we do not expect the country’s LNG infrastructure to grow at an unprecedented rate and approved terminals could face delays unless the gas-fired power plants are completed,” it said.
Fitch Solutions also said that the potential upside to Philippines’ LNG imports could be hampered by the country’s significant exposure to spot prices as none of the power producers has a secured term supply agreements.
“We anticipate LNG imports will be much lower compared to terminal capacity because importers are unlikely to import more than what is needed given higher costs of LNG,” it said.
According to Fitch Solutions, the Philippines needs to ramp up LNG imports for long-term supply security but the levels of imports will be dependent on its ability and willingness to pay for LNG.
It said the incentives to import more LNG would depend to a large extent on affordable LNG prices and storage requirements.
“Any upside risk to LNG prices could derail the LNG import outlook given the power sector’s inherent sensitivity to fuel price increases in combination with the government’s policy to keep electricity prices affordable for consumers,” Fitch Solutions said.
“Overall, the outlook for LNG imports remains bullish, but the future role of LNG in the power sector could be at risk if the incumbent Marcos government, which views natural gas as a transition fuel, invokes a change in current energy plans,” it said.
Fitch Solutions said it is not ruling out changes in long-term energy policies in the future to revive coal and accelerate energy production from renewables as key sources of affordable electricity over costly imported LNG.
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