EWC (ASX) Latest from Philippines

Originally posted by PalmTree ↑

Philippines set to start LNG imports by early next year

Mon Jun 9, 2014 3:23am EDT
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Hi PalmTree,

thanks for your posting. A good find. Hopefully EWC will follow this up shortly with announcing shipment of turbines etc.

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* Energy World says its LNG import hub, power plant to start 2015
* Shell, First Gen also working on projects
* Philippines needs more energy to power growing economy
* Looking to gas as cleaner source of energy than coal
By Erik dela Cruz
MANILA, June 9 (Reuters) - Australia-listed Energy World Corp Ltd expects its nearly $1 billion liquefied natural gas hub and power plant in the Philippines to be running by early 2015, paving the way to a new market for imports of the super-chilled fuel.
Purchases by the Southeast Asian nation would be welcome news for major LNG producers such as Chevron, ExxonMobil and Total, which are facing uncertainty about longer-term demand in Japan and South Korea, the top two buyers of the cleaner fuel.
"We expect to be ready to operate at the end of this year or early 2015," Energy World Chief Executive Stewart W. G. Elliot told Reuters on Monday. "Total cost is close to a billion dollars, including a 650 megawatt combined cycle power station."
That time frame would foreshadow the construction of two other LNG import and storage terminals in the next five years in separate projects proposed by Royal Dutch Shell Plc and local firm First Gen Corp.
The Philippines, one of Asia's fastest-growing economies, needs to boost its energy output to keep up with demand, but public resistance to dirtier fuels has delayed some coal-fired power projects.
Shell's Philippine unit operates the country's sole natural gas field, in Malampaya in the South China Sea, supplying three gas-fired power plants that account for a third of power generation on the major island of Luzon, home to Manila.
But the government expects the field to dry by as early as 2023, directing focus towards importing from global supplies swollen in the wake of North America's fracking revolution.
TWO DECADES
Hong Kong-based Energy World has a 20-year lease on land in Quezon Province in Luzon for its import hub, which is expected to have an initial capacity to ship in 3 million tonnes of LNG a year.
The power plant, at the same site, is slated to deliver 200 MW of supply by early 2015, before adding a further 450 MW by early 2016, Elliot said.
The company plans to ship fuel from its Sengkang field in Indonesia, as well as possibly buying under contract from other producers or in international spot markets.
The power plant will take most of the imports, but the company also plans to make gas available throughout the Philippines, distributing by sea to coastal terminals and by land via road tankers.
Manila Electric Co (Meralco), the country's biggest utility with a franchise that covers the capital and nearby provinces, could be a customer.
"We are open to that," Meralco President Oscar Reyes said, when asked about the possibility of buying Energy World LNG.
Energy World's Elliot added that there could also be "tremendous opportunities" to sell gas to industry, households and restaurants.
Elsewhere, Shell is looking to invest $2 billion to build new fuel storage and distribution facilities, including a floating LNG import terminal, while First Gen plans to build a $1 billion import hub to come online by 2019.
But the shift towards LNG faces some high hurdles - most notably that coal is still seen a cheaper source of energy, making some utilities reluctant to invest in gas-fired power generation.
Coal is the "most competitive" energy source, costing a little more than half the price of natural gas, said Meralco's Reyes.
"You've got clean technology in coal now ... but LNG clearly is a cleaner source of power."
The latest round of development comes less than a decade after several pioneering LNG power and pipeline projects were shelved or cancelled due to a lack of government support. Those included a supply deal with BP for a 1,200 MW power plant.
And Manila still has no development blueprint for natural gas, with its energy minister ruling out sovereign guarantees and state subsidies for LNG investors and users.
"Government clearly needs to help LNG, because right now everybody is focused on the cheapest which is coal," said Jesse Ang, a representative in the Philippines of the World Bank's private sector arm, International Finance Corp. (Additional reporting by Rosemarie Francisco; Editing by Joseph Radford)

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