Thirteen companies expressed their intention to participate in the planned $2-billion integrated liquefied natural gas project, the Energy Department said Friday.
The companies include Cleanway Energy Development Corp., First Gen Corp., Tokyo Gas Corp., China National Offshore Oil Corp., Philippine National Oil Co., Vires Energy Corp and SK E&S Co. Ltd.
Also interested in the project are Transformation Ltd., Carmine Energy Pte Ltd., Atlantic Gulf & Pacific of Manila, Jera Co. Inc. , Limay LNG Power Corp. and Kepco E&C.
Energy Undersecretary Leonido Pulido III said he was expecting the number of interested parties to increase in the next few months.
Pulido said the department would evaluate the proposals once submitted. He said some type of consolidation was expected among the interested investors.
Pulido also said interested investors should also show the viability of the project.
“If your design and your business proposal fits your market and is commercially viable, then we will issue a notice to proceed and permit to construct,” he said.
“They have to identify their market in the Philippines. If one company is able to identify or close a market which involves four or five of the power plants that are fueled by natural gas, then they will have that market to be commercially viable. Then we will permit it,” Pulido said.
He said the entry barrier for the first integrated LNG was very high, which would likely limit the number of investors.
“Although its possible for several companies to all build an LNG facility, you have to remember it’s not like building a convenience store. The entry barrier because of the capital involved is so high. It’s estimated to be $1 [billion] to $1.5 billion, so once a certain market is secured, then it doesn’t make sense for another entity to build the same,” he said.
Pulido said the country would likely support only two LNG facilities with the current market demand.
“That’s the reason why we want to have the Philippine natural gas rules institutionalized as a natural gas law. We want to have fiscal and non-fiscal incentives to develop other sectors,” he said.
Pulido said that aside from power generation as a captive market for LNG, other potential markets could include transportation and industries.
He said there should be enough incentives “to encourage those power plants that are running on coal to convert to natural gas.”